The TA Q&A: BMJ’s Omar Rahmanadi

Tobacco Asia recently had the chance to catch-up with the charismatic c.e.o. of PT Bukit Muria Jaya (BMJ), Omar Rahmanadi, who shared some thoughts on what paper manufacturers are currently facing.

Staff Report

Tobacco Asia: The industry has seen a shift in consumer behavior, with more consumers moving away from conventional tobacco cigarettes to next-generation products like e-cigarettes and HNB products. Has this presented a challenge for BMJ, one of the industry’s leading producers of tobacco papers, and how?

Omar Rahmanadi: Of course it makes us a little bit nervous. Some next-generation products still use paper, although in less volume, less amount of paper per stick. But, a lot of them don’t even use paper at all, so yes, that is a worrying trend. I think we have to work more closely with the principles, the cigarette manufacturers, to come up with some new exciting things that we can offer the consumer. We would be more than happy to share our knowledge about paper to come up with such products.

Tobacco Asia: And you’re known for your innovative ideas…

Omar Rahmanadi: We have been building our capabilities so that we would be the first one that comes to mind when cigarette companies need some innovation.

Tobacco Asia: Aside from a shift in consumer behavior, what do you think are other contributing factors that present a challenge to your particular segment?

Omar Rahmanadi: Regulations.  By far. You know, regulations can change the industry overnight and unfortunately, the regulations are getting stricter and stricter every year. Mostly in the US and Europe now but I think eventually it will also affect Asian countries as many countries tend to adopt western policies.

Tobacco Asia: What about Indonesia? It’s one of the largest populations of smokers.

Omar Rahmanadi: I don’t know about Indonesia but so far, they have other priorities, I guess [laughs]. But, [this might not be] forever, eventually they will also start to scrutinize.  We don’t know when but it will eventually come. And we will just have to adapt.

Tobacco Asia: What are some markets, regions, or countries, where you see positive growth potential for tobacco papers?

Omar Rahmanadi: Well, it’s actually difficult now to find a still growing market. Even the historically growing markets have now started to see a decline, including Indonesia. We used to be a growing market but in the last couple of years now the consumption has been shrinking. I just talked to somebody from India, they said India is also not growing, it’s flat. But at least it’s not dropping.

For Indonesia I would say the drop in cigarette consumption is caused by price increase. When the government increases the excise tax every year, the cigarette prices go up and then eventually people would rather spend the money on something else rather than cigarettes.

The data for roll-your-own is not published in Indonesia, but we see there is still a little bit of growth. Maybe some people switch from conventional cigarettes to roll-your-own because it’s getting too expensive and roll-your-own is more affordable. We have the papers to support that market segment and there is some growth potential. 

Tobacco Asia: Is this mainly focused in Indonesia?

Omar Rahmanadi: In other countries, I think it’s also the same case because the trend is like that over the world. When the tax is too high the price of cigarettes is too high, and people tend to switch to roll-your-own because for roll-your-own the tax rate is not as high. That might be a potential segment for growth.

Tobacco Asia: We’ve seen a lot of innovation in terms of tobacco products with all these next-generation products. Do you see a lot of potential for innovation in terms of papers?

Omar Rahmanadi: There are some new inquiries that we’ve received. Most of them I cannot really disclose because a lot of them are still under confidentiality agreements with our customers. But, some customers have been asking for some special properties.

Tobacco Asia: How would you envision the next generation of tobacco papers? We’ve had super-thin, curved, cut corners, natural gum, etc. Where do you see the direction going?

Omar Rahmanadi: I don’t know anymore. I used to think it would be more like they will start playing around with flavors, for example, but I think latest regulations in Europe ban a lot of flavors so I don’t know whether it’s still feasible or not.

Tobacco Asia: It seems people are now into healthy trends. Do you see how that might be applied in terms of papers?

Omar Rahmanadi: Maybe non-chlorine paper or paper with less chemicals.  More organic, more natural looking, possibly.

Tobacco Asia: Could you please give us a glimpse at what new “Eureka!” products we can look forward to from BMJ?

Omar Rahmanadi: [laughs] It will not be a surprise anymore. Eventually, it will still be paper-based. Basically, we are only dealing with paper-based materials so whatever it is it will still be paper. I will leave it to your imagination.