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Altadis and CETARSA cooperate in a multi-year tobacco purchasing plan

Altadis and CETARSA cooperate in a multi-year tobacco purchasing plan

20/12/2013 - Madrid
Press release CETARSA

ALTADIS and CETARSA (Compañía Española de Tabaco en Rama, S.A.) have begun a bargaining process which makes possible to prepare a multi-year tobacco purchasing plan for setting up the volumes which ALTADIS will purchase in the next years. With this Plan it is sought to achieve a better adaptation of tobacco purchases to the evolution of the market during this period, which would allow also to farmers to know the tobacco production needs.

During the last years, ALTADIS has bought most of the tobacco purchased by CETARSA. The tobacco which ALTADIS buys is previously acquired by CETARSA to Spanish farmers, and especially to tobacco growers from Extremadura. ALTADIS’ purchases represent every year around 50% of the tobacco which CETARSA buys to the growers, and are very well above its share of the Spanish market.

Thus, during the last five years, between 2008 and 2012, ALTADIS purchased from CETARSA an average yearly amount of 15,000 Tons on the basis of the raw tobacco which is processed at CETARSA’s plants. In 2013, ALTADIS added a further 3,800 Tons to the volume already planned, which the Italian company Mella could not finally acquire. However, in its current financial year, ALTADIS will purchase around 14,000 Tons of raw tobacco, which represents a decrease of its purchases in comparison with the previous year as a result of the hardening of the terms and conditions in the market and the fall in sales. In any case, this figure puts again its purchasing volumes at a level very close to the average recorded during the last five years.

ALTADIS’ tobacco purchases, as in the case of any other tobacco company, follow the evolution of the sales in the cigarette market, which have fallen more than 40% during the last four years, due to a large extent to the significant increase of the illegal trade. This fall provokes the accumulation of stocks at the storage facilities, which also determines the volumes purchased from CETARSA.

Backing firmly and resolutely tobacco cultivation in Spain

Mr. Juan Arrizabalaga, ALTADIS’ Chief Executive Officer, pointed out that “in spite of the difficult conditions prevailing in the market, our Company will continue backing firmly and resolutely tobacco cultivation in Spain. We intend to continue backing the Spanish tobacco industry and purchase a large part of the domestic production which, both in terms of quality and price, shows that it knows how to adapt to a highly competitive market. The IMPERIAL TOBACCO group, to which we belong, continues seeing the Spanish market as one of its main supplying markets in Europe, which is very gratifying for us”.

With regard to the reduction in the amounts asked in comparison with those foreseen at first, CETARSA’s Chairman, Mr. Javier Gómez Darmendrail, stated “being fully aware of the difficulties which are affecting now the tobacco market all over Europe” and he acknowledged “the key role played by ALTADIS and by the IMPERIAL TOBACCO group in the purchase of Spanish tobacco, and specially after the 2012 harvest, when it had a key contribution to solving the problem which had arisen with the growers which had previously reached an agreement with the Mella operator”.

CETARSA will fully honor the commitments

“Anyway – he added - CETARSA will fully honor the commitments it made regarding the 2013 harvest, and we foresee that it will be finally possible to reach the 4% increase in the price which had been signed. I will make all what is needed in order to guarantee that the level of next harvest is maintained within the same volumes of the current one, regardless of the difficulties which are taking place in the markets. We are fully convinced that, within the framework of the excellent relationships which exist between ALTADIS and CETARSA, which share a strong commitment with the defense of Spanish tobacco, we will reach an agreement which is acceptable for all”.

CETARSA y Grupo SEPI

CETARSA is the leading company in SEPI Group in the acquisition, first transformation and commercialization of raw tobacco in Spain. Since 1987, the year in which CETARSA was incorporated, this company has regularly supplied ALTADIS with domestic tobacco, as a result of successive medium and long-term supply contracts, with a price and quality terms and conditions in line with those of the market. ALTADIS has a 20.82% participation in CETARSA’s share capital.

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