Tobacco Asia

Tobacco Asia 61 He pushed the logic further. Even within a single plant, tobacco leaves differ by stalk position and characteristics. "On a tobacco plant, the plant might have 20 separate leaves," Wigner said. "All those different leaves and positions, they satisfy our customers' unique needs." Universal's role, he said, is to absorb that com- plexity at scale, then do what smaller competitors and integrated operations cannot: sort, process, allocate, and deliver tobacco leaf precisely to customer speci- fications across global markets. Wigner described the worldwide market for leaf tobacco outside China as being largely purchased by 3 competitive groups: global leaf suppliers, vertically integrated customers, and local and regional suppliers. He emphasized Universal's scale and financial strength as differentiators. "As the leading global leaf supplier, we are larger," Wigner said, adding that Universal's financial position allows it to invest in growth and provide value to customers. Vertically integrated manufacturers, he said, may face structural inefficiencies in sourcing. They often want specific leaf positions but must buy the entire plant when contracting directly with farmers. "One of the big benefits that we provide… those customers may only need certain types of leaf positions. They don't need that whole plant," Wigner said. "But when they buy that plant… they have to buy the whole thing." By contrast, Universal buys the entire plant and allocates those inputs across a broad customer base. Wigner said that the approach creates effi- ciency, lowers risk, and positions the company to grow share, including by providing more supply chain services and participating in next-generation product supply chains. Local and regional suppliers represent an- other competitive group, he added, but lack key differentiators — especially sustainability sys- tems, farmer support, and geographic diversifi- cation that reduces the impact of weather and geopolitical disruptions. "They don't have any of that," he said. He stressed that Universal's competitive edge lies in its supply chain capabilities, built on 4 pillars: sourcing, agronomy, processing, and logis- tics. Regarding sourcing, Wigner said Universal ac- quires leaf across a diverse set of markets through defined outlets. "We don't buy on a speculative basis," he said. Wigner repeatedly emphasized that farmer performance underpins Universal's performance. The farmer is a valued stakeholder in Universal's tobacco business. "Farmer success is our success," Wigner said. The company deploys agronomists who educate growers on best agronomic practices, monitor compliance with sustainability programs, and collect the data that customers and investors expect Universal to report. "We have strict sustainability programs we expect them to follow," he said. During processing, Universal's facilities are designed for high volume and tight specifications. "We've got processing facilities in all the key markets," Wigner said, describing large opera- tions "built for volume" that can meet customer demands. Logistics remains a key barrier to entry, he added, particularly in rural and challenging operat- ing environments. "We're experts at logistics… in places that are difficult to operate in," Wigner said, describing an end-to-end supply chain from farm to factory, factory to port, and port to customer. Wigner said Universal's tobacco business has performed well and that he believes there is still room to do more: increase volume, grow mar- ket share, and strengthen the company's footprint to ensure that assets generate expected returns. Second engine If tobacco is Universal's durable cash-flow ma- chine, Wigner positioned Universal Ingredients as the company's growth platform for the next era. "It's a new segment for us with food ingredients," he said, describing a business selling into food and beverage markets in the US and globally. Wigner said the ingredients strategy began in 2018. Since then, Universal has built a segment through acquisitions and subsequent investment — moving from a strategy on paper to an integrat- ed operating platform. "We thoughtfully, carefully acquired companies to give us the functions that we needed for a platform," he said. "We invested in that platform… and now they're operating." Those acquisitions expanded capabilities across multiple categories. "The ingredients side is really exciting," Wigner said. "We're putting in the work. We're making progress." Control engineer from the Universal Ingredients operation inspecting product from their innovative aseptic packaging facility. Credit: Universal Corporation

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