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Tobacco grading. Photo credit: SATA Corporation Limited
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Curing shed in East Java. Photo credit: SATA Corporation Limited
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Malburo Tobacco International also supplies custom-blended cut rag. Photo credit: Malburo Tobacco International
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A descendant of ancient Borneo royalty: Yang Mulia Dato Seri Paduka Prof. Dr. Noor Zaman Khan. Photo credit: Malburo Tobacco International
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Around 20% of SATA Corporation’s annual trading volume is acquired through contract farming. Photo credit: SATA Corporation Limited
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Logistics facility in East Java. Photo credit: SATA Corporation Limited
Smaller independent suppliers can serve as welcome fallbacks for quick tobacco orders during the current global shortage.
When push comes to shove in the current shortage, where manufacturers struggle to get their desperately needed raw materials, it sometimes is the smaller suppliers that can provide stocks. While these independents mainly serve tobacco product manufacturers in their respective home countries, they are also eager to fulfill an international order if the opportunity arises – and inventories permit. They often also have the admirable ability to locate tobacco stocks from the most unlikely sources.
One of these independent operators is Malburo Tobacco International. A family-owned business founded in 2017, Malburo maintains partnerships with green leaf threshing and redrying plants both in Indonesia and Pakistan. The company also runs a representative office in Poland, which facilitates exports from there to feed Indonesia’s eternally tobacco-hungry cigarette industry. However, Malburo’s two main operating bases are Indonesia and, interestingly, Malaysia. While the Indonesia location in East Java near Surabaya is an obvious choice, the selection of Malaysia is somewhat surprising. After all, Malaysia is not known as a major tobacco grower.
But Malburo c.e.o. Dr. Noor Zaman Khan cited good reasons for having set up shop there. “Malaysia is an extraordinarily convenient location, providing easy air travel connections to all corners of the globe for meeting prospective clients,” he told Tobacco Asia. “In addition, we also supply local factories with our Pakistani and Indonesian tobaccos, so it just makes sense to have a local representation,” said Dr. Noor who claims direct descent from the royal house of the ancient Kutai kingdom once located in what is today Indonesia’s East Kalimantan province on the island of Borneo.
When compared to the giants in the global tobacco supply chain, Malburo’s annual volumes are modest. According to Dr. Noor, in 2022 the company traded approximately 250 tons of top-grade FCV leaf and lamina, 500 tons of low-grade leaf, an equal volume of scraps, and 200 tons of custom-blended cut rag. The company also fulfills CRES orders on request. “Our volumes may appear small, but our advantage is that we always have stocks,” asserted Dr. Noor. “We don’t reject customers and go to great lengths to fulfill orders under the most difficult of circumstances and when larger companies must bail out,” he claimed. This was possible due to Malburo’s well-oiled, widespread partner network, he said. And perhaps to reinforce his point, he added, “You need Indian tobacco? I can get you Indian tobacco even when nobody else will.”
When, in 2017, Indonesian entrepreneur Tantawi Sagara founded SATA Corporation Limited in Hong Kong, it was with a focus on supplying Chinese tobaccos to overseas clients, including Indonesia’s burgeoning cigarette manufacturing sector. Then, three years later, Sagara decided it was time to also set up a company back home. He established PT. SATA Tembakau not only to serve manufacturers in East and Central Java better, but also to crank up the firm’s export business of Indonesian leaf. The firm today maintains its head office in Surabaya, operates a warehouse and storage facility in Bojonegoro and a buying station for Indonesian FCV in Lombok.
In 2022, Sagara imported to Indonesia approximately 8,000 tons of FCV from China, Brazil, Zimbabwe, and the US. “All tobaccos from outside of Indonesia we procure directly from our trade partners located in the respective origin countries,” he said. On the other hand, domestic Indonesian tobaccos are obtained either from the company’s own contracted farmers (20% of total annual volume) or from other local merchants (80%). While Sagara declined to disclose a concrete annual tonnage, he divulged that around 50% of the Indonesian tobacco is supplied to domestic manufacturers while the remaining half is exported. For GLT and primary processing, the company uses third-party facilities in Bojonegoro and Sidoarjo.
Asked what the most persistent challenges for his company were over the past 12 months, Sagara insisted that it had been a good year overall. “We were able to actually foresee that a tobacco shortage was looming and knew that it would result in frantic demand both domestically and internationally and would cause prices to skyrocket,” he said. Admitting that it was a bit of a speculative gamble at first, he decided to buy up “quite a lot of inventory to position us comfortably”. The gamble paid out, of course, illustrated by steeply increasing purchasing inquiries streaming in from the company’s clients soon enough.
That doesn’t mean that everything has just been going off without any hitch, though. “Perhaps the most persistent challenge that we have been facing during the ongoing shortage is that apart from dealing with rising demand from our regular customers we also were approached by new customers who were desperate to lay their hands on some tobacco,” Sagara explained. He added that the company revised and improved its buying and shipping methods in an attempt to ac-quire tobacco inventories faster and subsequently shipping them out faster too. “That proved not so easy mainly because of the many new customers who continue turning to us because their previous suppliers have run out of stock,” he said. “But I think we sort of manage.”