Who Owns Whom

tobacco industry mozambique

The Tobacco Industry in Mozambique 2020

Stephen Timm | Mozambique | 24 February 2020

Enquire about this report

Report Coverage

This report focuses on The Tobacco Industry in Mozambique and includes latest available information on the state and size of the sector and factors that influence it, including economic and climate factors. There are profiles of four companies including British American Tobacco, which has one of its three southern African plants in Mozambique, and Universal’s Mozambique Leaf Tobacco, which dominates the growing and processing of tobacco. Emperor Tobacco Mozambique, which was setting up a manufacturing facility in Maputo to manufacture its brand Rico, is also profiled as is major distributor JT International South Africa.

Introduction

The tobacco industry forms part of Mozambique’s agricultural sector, which contributed 24% of GDP in 2015 (the last year of available statistics), according to statistics from the Ministry of Agriculture and Food Security. Tobacco contributes about a third of total agricultural exports and almost 4% of the value of the country’s total exports of goods and services. The majority of the agricultural sector is made up of subsistence farming, with mostly small family farms growing tobacco alongside other crops. About 130,000 to 150,000 farmers grow tobacco in Mozambique. The industry is dominated by British American Tobacco (BAT) (manufacturing) and Universal’s Mozambique Leaf Tobacco (MLT) (growing and processing). A new cigarette manufacturer set up in Mozambique in 2018, and its effect on the sector is unclear at this stage. Figures are tightly guarded by market players and few in the sector want to comment on the market. While demand for tobacco in traditional global markets has been declining, Asian and African demand has been growing steadily and leaf sourcing is moving to low-cost producing countries, making the Mozambican tobacco sector attractive for investors.

Strengths

• Diverse soil types and climatic conditions are suitable for a large variety of crops.
• The concession system in operation in Mozambique provides smallholders with a market to sell their tobacco to large processors.

Weaknesses

• High dependence on foreign aid.
• Limited access to credit by smallholder farmers.
• Management and technical skills shortages.
• Monopsony means farmers are often price takers.
• Most small-scale farmers cannot afford production inputs such as fertiliser, pesticides and improved seed.
• Weak infrastructure

Opportunities

• About 85% of the country’s arable land is unused.
• As the country becomes richer more smokers are likely to change to vaping and other perceived healthier tobacco products.
• There is no immediate move to legalise growing or smoking cannabis in some form, as South Africa and Zimbabwe have done. But this is something to keep an eye on.

Threats

• Despite the signing of a peace treaty in August 2019, the threat of violence lingers.
• Droughts and irregular weather are set to increase with climate change.
• Pests destroy a large percentage of crops.
• Smoking prevalence among Mozambicans is steadily declining.

Outlook

Tobacco is a promising crop, given expectations of double-digit growth in the prevalence of smoking by 2030. Mozambique’s agriculture sector has plenty of room to grow, given the large percentage of unused arable land. The country has about 36 million hectares of arable land, of which only around 6 million hectares is currently in use. By one estimate just over 1 million hectares of land has been acquired in recent years by investors for farming activities. However, it is uncertain what effect climate change will have on tobacco cultivation which is mainly carried out in the central and north of the country, and which is expected to see higher rainfall and flooding in the near future. It is also unclear how what effect the addition of a new entrant, Emperor, will have on the market. For now, the industry in Mozambique remains highly controlled and dominated by two companies.

Read More..
The Tobacco Industry in Mozambique
The Tobacco Industry in Mozambique 2020

Full Report

R 1 900.00(ZAR) estimated $104.58 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 73.21 (USD)*

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
2.1. Geographic Position 2
3. DESCRIPTION OF THE INDUSTRY 5
3.1. Industry Value Chain 5
4. SIZE OF THE INDUSTRY 7
5. STATE OF THE INDUSTRY 9
5.1. Local 9
5.1.1. Regulations 10
5.1.2. Enterprise Development and Social Economic Development 11
5.2. Continental 11
5.3. International 12
6. INFLUENCING FACTORS 13
6.1. Government Support 13
6.2. Economic Environment 14
6.3. Technology, Research and Development (R&D) and Innovation 16
6.4. Labour 16
6.5. Marketing 17
6.6. Health Concerns 17
6.7. Environmental Concerns 17
6.8. Industry Social Initiatives 18
6.9. Illicit Cigarettes 19
7. COMPETITION 20
7.1. Barriers to Entry 20
8. SWOT ANALYSIS 20
9. OUTLOOK 21
10. INDUSTRY ASSOCIATIONS 21
11. REFERENCES 22
11.1. Publications 22
11.2. Websites 22
APPENDIX 1 24
Summary of Major Players 24
COMPANY PROFILES 26
BRITISH AMERICAN TOBACCO PLC 26
EMPEROR TOBACCO (PTY) LTD 30
JT INTERNATIONAL SOUTH AFRICA (PTY) LTD 32
MOZAMBIQUE LEAF TOBACCO LDA 34