SEKE: Quality Leaf from Greece’s Largest Supplier

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With multinationals comprising its by far largest customer segment, SEKE S.A. is today Greece’s top tobacco merchant by total volume and value, making the cooperative a poster child for Greece’s economic recovery that hopefully eventually also will spill over into other industry sectors.

By Thomas Schmid

Based in Xanthi, a city in the northeastern Greek region of Thrace, the Cooperative Union of Tobacco Producers in Greece S.A. – or SEKE for short – was already founded in 1947 and the company claims to currently be Greece’s largest tobacco merchant.

“We also are a very dynamic company, combining our rich heritage and experience in the tobacco sector with innovative initiatives and modern business values and practices,” said general manager Alexandros Kontos. Maintaining modern processing facilities in Xanthi, SEKE currently exports to more than 30 countries in Europe, Asia, North America, Latin America, and Africa. The cooperative mainly offers Basma and Katerini oriental tobaccos plus FCV. But interestingly, SEKE’s current product portfolio also comprises a number of tobaccos which the company obtains from neighboring countries: The Krumovgrad and North Bulgaria varietals come from Bulgaria, for example, while Prilep and Yaka are acquired from FYROM (Former Yugoslav Republic of Macedonia).

Favorable Business Outlook

Since Greece’s tobacco auction system has been abolished, almost 100% of SEKE’s tobaccos is sourced from contracted farmers and estates, while a minuscule quantity is purchased from small traders and cooperatives, according to Kontos. For the 2016 crop, SEKE had contracted 4.709 farmers in Greece, 1,529 in FYROM, and 3,216 in Bulgaria. For the 2017 crop season, Kontos projected a total of 5,100 Greek contract farmers, as well as 2,800 in FYROM, 3,250 in Bulgaria and – for the first time – 800 in Albania. SEKE’s Basma and Katerini are exclusively grown on small farms, the average cultivated acreage for Basma being 0.9 hectares (ha) and for Katerini 1.4 ha per farm, according to Kontos.

Meanwhile, FCV is grown on somewhat larger estates averaging 4.5 ha. Across all tobacco types in its trading portfolio and including tobaccos obtained from neighboring countries, SEKE in 2015 purchased 10,360 metric tons, while the total amount in 2016 was 12,735 tons. For the 2017 season, the cooperative forecasts to handle 15,450 tons.

“We expect rather stable production conditions [this year], but of course the weather always is an uncertain factor that can impact the harvest negatively,” Kontos explained his projection.

The Asia and Multinationals Snap Up

SEKE anticipates a favorable business expansion this year thanks to several compounding developments.

“Our trading volume will likely increase due to our more diversified tobacco portfolio but also our business expansion into other Balkan countries, the strong support from our current customers, as well as our drive to enter new markets,” Kontos said. In Asia, SEKE’s most important export markets currently are Japan, South Korea, and the Philippines. “Japan and South Korea are our Asian key markets, and their importance for us will increase even further in the future because there is strong interest for prime-quality tobacco products [among end consumers].”

He added that the Asian market presently absorbed approximately 25% of SEKE’s exports. “But Indonesia is our key goal for a new Asian market that we intend to penetrate in the near future. It is a developing market and we can see a lot of potential there.” The remaining 85% of SEKE’s total sales go to “the big multinational manufacturers”, although Kontos declined to disclose any specific names. Because the majority of the cooperative’s trade consists of oriental tobaccos, around 75% is sold in loose leaf form, the rest – assumingly FCV – as strips.

Organic FCV from Greece

SEKE-supplied orientals are used in American blend cigarettes, owing to their full aroma and taste.

“Together with Turkish Samsun and Izmir leaves, Greek Basma, and Katerini are considered the best oriental tobaccos in the global market,” asserted Kontos. He also said that Greece-produced FCV, suitable as filler or as a component of shisha tobacco, likewise imparted a full aroma with low nicotine and high sugar content. “And a big category among Greek FCV is the organically grown type, which is guaranteed free of CPA and suitable for specific products.” [Tobacco Asia is aware of an emerging niche market for all-natural cigarettes and other tobacco products that are becoming increasingly trendy in Europe, North America. and to some extent also the Middle East.]

Quality Comes First

As the quality of its leaf tobacco in every aspect is SEKE’s first and foremost priority, the cooperative has set up a framework that ensures that its merchandise is guaranteed to adhere to that premise. At the beginning of every season, protocols are formulated by the cooperative’s administration in line with SEKE’s policies for sustainable farming, environment-friendly initiatives and social responsibility, and also taking into consideration the customers’ requirements.

“Quality is achieved through the efficient implementation of these protocols. It’s the way we operate,” said Kontos. SEKE agronomists and field technicians are dispatched, organizing farmer training to guide the growers towards the effective application of the protocols, which are also stipulated in the contracts. “The guidelines are applied by every one of our farmers in the fields and under continuous guidance, monitoring and control from our staff. Even after the harvest, quality assurance systems are in place at our facility in Xanthi, including three quality control labs.”