THE credit crunch facing European consumers has presented local cigarette producing firms with new opportunities as more foreign retailers seek private label options, Savanna Tobacco chairman Adam Molai has said.
REPORT BY OUR STAFF
New options would allow the retailers to offer their consumers cost-effective alternatives.
“We see this as a major growth segment into the future and are fully geared to tap into it,” Molai said.
Molai said the company’s focus this year was primarily on consolidating the whole brand portfolio to ensure sales and revenue growth.
“Tangible improvements have been made internally in the way we operate as a business and costs have been kept in check as a result.
“Production figures increased which reduced our fixed overheads. This was a direct result of increased sales both on the local and export market,” said Molai.
He added that the company operated at the lowest level of the cost curve in comparison to competition.
The company has developed three brands — Pacific, Pegasus and Branson. Each brand has four products under its wings.
Molai said the Pacific Blue brand had been well-received in the South African market, where the company already runs a full-fledged office.
In the financial year 2011, the company invested US$500 000 in order to improve operational efficiency and grow in the export markets.
The company’s installed capacity is 4,5 billion sticks per annum based on producing and packing 16 000 cigarette sticks per minute, translating to 55% capacity utilisation.
This represents a major growth rate in the context of the company’s previous average monthly output of 3 000 master cartons in 2004 to between 35 000 and 40 000 master cartons monthly.
Savanna exporting directly to countries
Last year, Savanna Tobacco developed its equipment and machinery in collaboration with a German cigarette packing equipment manufacturer, Focke and Co.
“This has led to the company becoming the first in the cigarette industry to be able to package cigarettes in quantities of two cigarettes per pack, five per pack and 10 cigarettes per pack in flow wrap material,” he said.
The company is also exporting its products directly into Zambia, Angola, Namibia, Swaziland, Mozambique, the Democratic Republic of Congo, South Sudan and Guinea.