Tobacco Asia

56 tobaccoasia / Issue 4, 2018 September / October "And to make it into reality, we have embarked on several ongoing projects." And the list is noth- ing short of impressive: As already mentioned, the company is currently building a production line for reconstituted tobacco in Bondowoso, Indo- nesia. "But," continues Sayin, "we are also in the process of acquiring a recon facility in Brazil, have signed a joint-venture agreement in the Domini- can Republic to invest in a cigarette factory, are building a CRES line in Malta, and have signed an offtake agreement with the Cameroon Farmers' Association for obtaining cigar leaf." Finished products for end consumers likewise are a segment into which Star Corporation intends to branch out. For example, a joint-venture agree- ment has been recently signed between Star and Golden Leaf China to produce heat-not-burn sticks under the brand name of "X-Gen," which soon will become available in several markets, starting with South Africa. "We also have just in- troduced our proprietary Madrid cigarette brand in Asia," Sayin discloses, "and then we are of course also very determined and enthusiastic about launching an exclusive smoking pipe brand, New World Pipes." Created by some of the world's most accomplished craftspeople, the hand-made meer- schaum and briar pipes will initially be launched in South Africa. "We see great potential in pipes, as it is an exciting but often underestimated market," he says. "As you can see, there is a lot happening at Star Corporation," Strategic warehouse locations Despite being entangled in all of this – the rebrand- ing, restructuring, and product diversification – Star Corporation has never lost sight of its original vi- sion: providing on-time service to small and me- dium sized enterprises, particularly when it comes to tobacco customers. SAI's advantage are the firm's strategically located warehouses in Antwerp (Belgium), Jember (Indonesia), Ho Chi Minh City (Vietnam), and Durban (South Africa). "When a customer places an order on Monday [and] we re- ceive payment on Tuesday, the container or truck is loaded on Wednesday. That sort of service is not easy to find in this Industry," asserts Rüştü Çalık. The soon-to-open warehouses in Russia and Ukraine are going to ensure that same lightning-fast service in those two countries as well. Table 1: Customer Distribution by Region *including Australia/New Zealand Sources: 1Rüştü Çalık, Group Logistics Manager / 2Afsaneh Ghorbani, TSAL NTM Sales Supervisor Region Star Agritech Tobacco Solutions International (SAI)1 Asia Limited (TSAL)2 Americas 10% 25% Asia 30% 5% Asia-Pacific* 5% 5% Europe 25% 15% MENA 20% 25% Sub-Saharan Africa 10% 25% 100% 100% Table 2: SAI Y-o-Y Profit Growth 2015-2018 Source: Eray Özdemir, Accounting Supervisor, Star Agritech International Year-on-Year Profit Growth (Tobacco Business Only) 2015 2016 2017 2018 (projection) 10% 15% 25% 30% Table 4: TSAL Y-o-Y Trade Volume Growth by Product Category 2015-2018 Source: Afsaneh Ghorbani, TSAL NTM Sales Supervisor Product Category Year-on-Year Growth 2015 2016 2017 2018 (projected) Cigarette Paper 0% 0% +10% +10% Tipping Paper 0% 0% +10% +15% Plug Wrap Paper 0% 0% 0% +10% Inner Frame 0% 0% +10% +5% Packaging 0% 0% +3% +10% Aluminium Foil 0% 0% +10% +20% Tear Tape 0% 0% -5% 0% BOPP Film 0% 0% -10% -5% Filter Rods 0% 0% +20% +25% Tow 0% 0% +5% +5% Flavor Capsules 0% 0% +5% +10% Triacetine and other adhesives 0% 0% 0% +5% New machinery 0% 0% +5% +10% (regardless of type) Second-Hand Machinery 0% 0% +20% +35% (regardless of type) gentina through which we purchase tobacco, we thought we could just as easily utilize it to also buy soy beans, Argentina being the world's number one producer. Furthermore, as we also have established a good network in South Africa, why not add the country's excellent wines to our portfolio? And Turkey, where our operational headquarters is located, produces some of the world's best olive oil…" The rebranding was accompanied by the inauguration of a brand new six- floor head office in Istanbul, long planned to finally accommodate the core companies Star and TSAL under one roof. "Sharing the same building helped to speed up the process of decision making and has made us – as a company group – only stronger," asserts Sayin. However, a new name, a consolidated headquarters and expanded portfolio were not the limit of what Star Corpora- tion was eyeing as part of its rebranding. Perhaps the most momentous vision Star Corporation has in mind for 2018 concerns its transformation from being a trader to becoming a fully- fledged processor and manufacturer of tobacco products in its own right. "We deemed that a clearly necessary, even natural, progression," says Sayin.

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