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Tobacco Mecca

Indonesia's East Java Continues To Produce Fine Tobacco Despite its Troubled Economy
James Suckling
From the Print Edition:
John Travolta, Jan/Feb 99

(continued from page 1)

Unfortunately, a lot of poor tobacco is also grown in the more than 27,000 acres of tobacco fields of Jember, and a lot of it has been shipped over the past three years to manufacturers who were supplying cigars to a booming U.S. market. Both well-known and start-up companies could not find enough tobacco to fill their production needs, and some turned to Java tobacco, which was more readily available and cheaper than tobacco from more traditional sources such as the Dominican Republic, Nicaragua, Ecuador, Mexico and the United States.

"People could see the money," says Jan Meskens of Netherlands-based Indoco International, which markets and sells tobacco from Indonesian processor PT. Tempu Rejo, one of the most respected names in Jember tobacco. "You had just about anyone setting up and trading in tobacco. It was bananas. We just kept supplying our regular customers, but plenty of people wanted tobacco from us. We did not speculate; but others around us certainly did."

It's difficult to refuse when companies are literally knocking at your door with money in their hands to buy tobacco. Jember tobacco dealers can recall dozens of visits from American tobacco buyers over the past three years, most of whom had never set foot in Indonesia before. For instance, the Wanamartas cite a visit in 1995 when three U.S. cigar manufacturers (they will not reveal the companies' names) visited over two days and bought almost all the leaves they had in stock, regardless of quality. "Together these U.S. buyers bought $10 million to $12 million worth of tobacco," says Sin Teguh Wanamarta. "Two companies came the first day, and they bought everything. The next day, the representatives from the other company came and I told them I didn't have any tobacco to sell. They still wanted to see the samples, which equaled about 20 kilos' worth. They looked at the samples and then threw their American Express Gold Card on the table and said they would buy the samples. I knew then that we were in a major boom."

Although the boom would last only two or three harvests, companies took advantage of the situation. Just about anything passing for cigar tobacco was sold to American-market manufacturers. For example, demand in the past for stem-removed, or "frog stripped," filler tobacco from the region was a few thousand bales a year. But last year more than 29,000 bales were shipped, most of which went to U.S.-market cigar manufacturers. Key tobacco processors here say that most of the 29,000 bales were inferior, without any quality control or specifications for the manufacture of handmade cigars.

"Most of the cigar manufacturing companies didn't know what Indonesian tobacco really was," says Sin Teguh Wanamarta. "Most knew that Bali [which doesn't grow tobacco to any extent] was in Indonesia but they didn't know anything else about our country. They didn't even known that Sumatra was an island." Yet, the fax machines of the Wanamartas and others were whizzing with orders for samples. Some people offered to buy tobacco unseen. Others received samples of tobacco and had little idea how to use the leaves. Sin Teguh Wanamarta says that he often received telephone calls from cigar manufacturers' tobacco buyers asking which tobaccos were for the wrapper, binder and filler--the three parts of a handmade cigar. "Once we explained how it worked, they were happy," he says. "But we were not counting on their business for the future. We knew that it wouldn't last."

"We didn't really make a lot of money in the boom," his father adds. "We just got rid of our [bad] stocks. Everything sold. It was amazing. However, our regular customers were even more difficult in this period. We had to keep the best for them."

Traditionally, most of the Java tobacco production is purchased by large European cigar manufacturers such as France's Seita, Swedish Match, the Netherlands's Agio and Switzerland's Burger Group. Combined, these firms represent close to half of the global cigar market. (The lowest-quality tobaccos from East Java go to North Africa for dark cigarette production.) The aromatic and rich tobacco grown near Jember, mostly of a variety called besuki, is a key component of the blends of most machine-made small cigars for the European market.

The region south of Jember, where most of the wrapper tobacco is grown, resembles farmland around the world, with hundreds of acres of tobacco being grown side by side on a flat plain. But most Jember tobacco experts agree that it is the region just north of Jember that is best for filler tobacco. The area is more jungle-like, with richer soils and smaller plantations. "The northern area of Jember gives you the richest tobacco," says John Setiadi, an Indonesia tobacco expert who works with the Wanamartas. "You could make great handmade cigars with this tobacco, but the problem is that all the European manufacturers have a monopoly on this. They have been buying it for years. That's why most Americans who came here a few years ago got the worst quality tobacco."

One American company that didn't get inferior tobacco from Java during the boom was Consolidated Cigar Corp. One of the dominant premium cigar manufacturers, producing such prestigious names as H. Upmann, Royal Jamaica and Montecristo, Consolidated has long been a believer in Indonesian tobacco, and over the past 10 years it had made a long-term commitment to the wrappers of Jember. It was through Consolidated's interest in top-quality wrappers that Tempu Rejo developed a premium version of TBN (an abbreviation for tabaco bawah naungan, translated as "tobacco under sheet," or shade-grown tobacco) that was suitable for the American market. "We had been doing business for a long, long time in the region," says George Gershel, a senior tobacco buyer for Consolidated who has been with the company for close to four decades. "We relied on our relations with these dealers to obtain the best tobacco possible at the time."

For years, Consolidated has spoken for nearly all of the premium production of TBN in the region. The key growers and processors of TBN, Tempu Rejo and PT. Perrebunan Nusantara, would never let Consolidated down, even in a boom, since the cigar giant was so instrumental in developing the wrapper.

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