Alliance One Tobacco Malawi
The Cream of the Crop
Alliance One Tobacco Malawi
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The Cream of the Crop Alliance One Tobacco Malawi has firmly positioned itself on the world stage by pioneering an Integrated Production System which could lead the company into a new era of prosperity Written by: Jonny Williamson Produced by: John Holliman >>>
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s a business dependent on the quality of the tobacco crops available to it, a new approach to the supply chain in Malawi has garnered the attention of Alliance One’s operations across the globe. Previously, the company purchased the majority of its tobacco requirements from one of the country’s four auction houses, but by embracing an Integrated Production System, Alliance One Malawi now has a stronger engagement with the farmers directly and a greater control over its procurement.
A successful pilot scheme over the past five years has resulted in the Malawian government finally accepting the change by agreeing that 80 percent of tobacco needs could be sourced through contract farming and only 20 percent via auction. “It’s a major change and something we have been absolutely instrumental in bringing about,” explained Managing Director, Hugh Saunders. “We have the largest investment in the field and are therefore able to gear up very quickly in adapting to the change; something that should see us expand our already substantial market position.” 3
Alliance One Tobacco Malawi The Cream of the Crop
In the top five Part of Alliance One International, Alliance One Tobacco Malawi is just one of many regional operations the global company has in order to cater to manufacturers of cigarettes and other consumer tobacco products from more than 90 countries. Though Malawi isn’t the company’s biggest operation, it is in the top five in terms of revenue contribution, increasing the pressure during this period of transition. “There are 2,500 farmers involved in our IPS, half of which are currently onboard and the remainder will be by end of 2014,” said Saunders.
There are 2,500 farmers involved thephoto IPS here Captioninfor 4
“They will be providing 100 percent of our burley tobacco needs, with 50 percent of our flue-cured requirements sourced through our 19 Alliance One leased-or-owned farms.” All of the tobacco is brought to Alliance One Malawi’s stateof-the-art factory in Lilongwe to be processed and packed ready for distribution. Due to the highly stringent standards demanded by global manufacturers such as Imperial Tobacco, Phillip Morris International and British American Tobacco, technicians use laboratory test equipment to verify the utmost quality throughout the process. “It’s extremely important for us to meet the expectation required of us, requiring substantial annual investment to keep up with technological developments,” Saunders stated. “I think being a part of Alliance One International is crucial to our ongoing survival, especially in regards to accessing expertise and financial backing.” Key factors One of the key factors behind the company’s ongoing success has been the willingness to invest, all geared towards raising efficiencies and increasing competitiveness in a progressively tougher market.
(The IPS) is a major change and something we have been absolutely instrumental in bringing about.” — Hugh Saunders, Managing Director, Alliance One Tobacco Malawi “Being landlocked, our supply chain is incredibly important to us, and to Malawi itself as tobacco forms 60-70 percent of the country’s foreign exchange earnings,” Saunders explained. “There were a lot of inefficiencies within the previous supply chain, something we are hoping to rectify by implementing the IPS. We will reduce the farmers’ costs, provide access to finance and make the crops more profitable for the both of us.” All of the tobacco processed by Alliance One Malawi is exported to countries around the globe; Malawi
Hugh Saunders planting a tree is in fact the biggest exporter of burley in the world. As air freight is too expensive, sea is the preferred method of distribution; with 60 percent flowing through Beira Port in Mozambique, 30 percent through South Africa’s Port of Durban and the remaining balance handled by the Port of Nacala, also in Mozambique. Crucial role Investing in technology is playing a crucial role in the successful deployment of the IPS. One example of this is the new electronic data capture system 5
Hunyani Corrugated Products A Division Of Hunyani Paper & Packaging (1997) (Private) Limited
Suppliers of World Class Packaging Preferred supplier to the Tobacco Industry within the region. Suppliers of double-wall board cartons to client specifications for the packing of Tobacco products including lamina, fines and stem. Hunyani Corrugated also manufacture boxes and cartons for the following sectors; FMCG Floriculture Horticulture Poultry Food & Beverage industry
Associated companies within the group, Printopak and Flexible Products, are suppliers to the above sectors of labels, folding boxes and paper sacks and bags.
Hunyani Corrugated Products Division cnr Melbourne/ Highfield Roads Southerton Harare.
Telephone: + 263 4 620167–9 Switchboard Cell: +263 772131352-3 Email: marketing@hunyanizim.com Website: www.hunyanizim.com
Tel:+263-4-620160/9, 661493, 668838 Cell: +263 772 131 352/5 e-mail:marketing@hunyanizim.com
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Alliance One Tobacco Malawi The Cream of the Crop Supplier Profile
Hunyani Paper and Packaging Industry: Packaging Services: Supply of paper to packaging industry. Sectors: FMCG Florticulture, Horticulture, Poultry, Food & Beverage Industires. Website: www.hunyanizim.com
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Farmers Organisation Employees: XXXXXX Established: XXXX Industry: xxxxxxxx xxxxxx xxxx Services: Xxxxxx xxxxxx xxxxxx xxxxxxxxxxx xxx xxxxxx xxxxxx xxxx xxxxxx xxx xxxxxx xxx xxxxxx xxx Management: Job Title – Name and Last Name Job Title – Name and Last Name Website: Walking-Tractor training www.website.com
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which gathers information from each farm and collates it onto a centralised database. The factory is also being upgraded with $9.6 million currently being spent on a new racking system to reduce the amount of manual handling the tobacco is subjected to. “We invest in the factory annually in an effort to raise performance and make a better use of crop yields and resources; though one of the challenges created by bringing in technology is finding suitably experienced workers,” said Saunders. Raising local skills is very important to Alliance One Malawi, so it provides a wide range of internal training, drawing on the vast resources available to it. “We regularly bring in experts from our overseas operations on fixed-term contracts, a mandate of which is that they have to train up one or more local workers before they leave,” Saunders said. “We’ve also had to recently expand our agronomy department from 12 workers to almost 200 in preparation for the wider rollout of the IPS.” Self-sustainable Operating responsibly is a cornerstone of Alliance One FEBRUARY | 2013 |
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Alliance One Tobacco Malawi The Cream of the Crop Supplier Profile
Combine Cargo Employees: Combine Cargo
(Mw) Ltd is a Malawian owned and managed Freight Services Company. We are represented in sub-Saharan region and have international partners and associates worldwide. Our mission is to transport your goods safely and economically Website: www.combinecargo.co.mw Visit us online:
Supplier Profile
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Reception Malawi’s ongoing strategy, and forms another significant area of investment. It’s currently working with the Malawian government in regards to the state-managed forests, with a $3.2 million project awaiting approval to ensure the company’s wood requirement is not only replaced, but correctly maintained. “It is our intent that all of our present and future plans will be totally self-sustainable in regards to wood,” Saunders stated. “We’ve also worked with our farmers over the past four years to plant 10 million trees, as well as co-sponsoring a ‘one child – one tree’ programme at local schools, both of which have been very successful.” FEBRUARY | 2013 |
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CORPINVEST INDUSTRIAL (PTY) LTD COMPANY REGISTRATION NUMBER 2002 / 024439/07
Process, Design and Manufacturing Engineers to the Tobacco, Tea and Mining Industries Suppliers of all spares for SMI and Griffin Tobacco Machinery, Polyester Filter Socks, Cages, Venturi, Solenoid Valves, Hydraulic and Electrical Spares, Texite Trunnion and Jockey Wheels, Cylinder Trunnion Rings, Filter Rotary Valves (Corp 400), Quality Control Equipment, Motorised Conveyor Rollers, NSK Bearings, Seals, Vesconite, Engineering Plastics, Tufnol, UHMW Strips and Sheets, Perspex Sheets, Duct and Filter designs and specifications.
P.O Box 59485 Munster 4278, Tel: 00 27 39 3191148 KwaZulu Natal, Fax: 00 27 39 3191486 Republic of South Africa. Cell: 0721 064 144
Email: corpinvest@telkomsa.net
Alliance One Tobacco Malawi The Cream of the Crop
Another worthwhile green initiative the company has pushed forward is the creation of ‘live barns’ for the curing of burley. Previously barns were made by the farmer through the frequent cutting down of trees to manufacture the basic structure. Alliance One Malawi has combated this practice by planting 7,500 ‘live barns’, 1.1 million trees that are grown and used as to support the barn from where they stand, removing the need to chop them down.
Overseas
Reaping the rewards Part of the Alliance One International group since 2005, Alliance One Malawi has already won a variety of accolades from its customers; with its agronomy department recently wining an international award in recognition of its development and the expertise they have brought to Malawian agriculture. By changing the way it operates, Alliance One Malawi is becoming more exposed than it ever was sourcing its requirements through auction, but the company believes the IPS is the most sustainable
STATISTICS
Industry: Tobacco Founded: 2005 Headquarters: Lilongwe, Malawi training model moving forward, said Saunders: “While the challenges are there, it’s a very exciting time with a tangible feel-good factor surrounding the business. The project has already proven itself in the initial stages and been embraced by all concerned. “In the short time we’ve being operating it, we’ve doubled the size of our yields, increased quality and given our customers the confidence that Malawi is worth a second look. We are the envy of our competition and we aim to keep it that way.”
Key People/Titles: Hugh Saunders, Managing Director Products: Processing tobacco for cigarettes and other related consumer products Revenue: $20mill+ Employees: 3,000+ Website:
www.aointl.com
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Alliance One Tobacco Malawi PO Box 30522 Capital City Lilongwe 3 Malawi Tel: +265-1-710-044 / 710-255 Fax: +265-1-710-312 admin_mw@aointl.com www.aointl.com
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