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Tobacco Mecca

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

Listen to the tobacco. The massive warehouse is silent except for the sound of tobacco leaves in motion. Hundreds of young women build and dismantle piles of tobacco that have just arrived from the fields located around the city of Jember, in Indonesia's East Java province. The freshly dried leaves lightly crackle, like pieces of tissue paper being folded into gift boxes at a department store. The workers are sorting the tobacco leaves by quality, color and texture--an initial classification before fermentations begin. The women sort the tobaccoslowly and methodically, working almost as if they are in a trance. They do not look at one another. No one speaks.

"Tobacco is a very special product," says Sin Teguh Wanamarta, a young, Dutch-trained physician who now works with his father, Eddy Dharsan Wanamarta, processing and trading tobacco at their company, PT. Ledokombo. "We forbid our workers to speak while they work. Otherwise, they may make a mistake. They must work meticulously. The tobacco must be handled with respect." Chinese Indonesians, the Wanamartas are two of a handful of key tobacco men in and around Jember who buy, process, pack and ship tobacco throughout the world.

The diligence displayed by the thousands of laborers in the fields and warehouses of Jember underlines Indonesia's staunch work ethic. That belief has helped sustain workers' spirits in spite of a free-falling economy since the autumn of 1997 that has made life very difficult for the 5 million inhabitants of this tobacco city and the 220 million citizens of Indonesia, the world's fourth most populous nation. For instance, the price of rice, a staple of the Indonesian diet, increased nearly seven times over a six-month period last year while the local currency, the rupiah, dropped to one-fourth its value during the same period. A kilo (2.2 pounds) of rice now costs close to 4,000 rupiah (about 35 cents), when not so long ago it was about 600 rupiah. That's a lot of money for people who only make an average of 5,000 rupiah a day and eat about five kilos of rice a week, say Indonesians interviewed in Jember. It leaves very little for a family and other living expenses.

"It's amazing that more people do not riot considering their situation," says one tobacco worker in Jember, who added that a few tobacco drying barns had been burned in September in protest. (Most of the protests that made the international news last year occurred in the capital of Jakarta or other major cities.) "We have lost everything we have worked for. It is so difficult for us to survive. But because we continue to work shows that we are very stable people."

The economic woes of Indonesia are hard to imagine while looking down at thousands of acres of tobacco growing in the warm afternoon sun. It's a scene that has existed for centuries. Lives, economies and governments may change, but tobacco growing continues. Indonesia is one of the oldest producers of quality cigar tobacco in the world, with a leaf-growing history dating back to the late 1700s. As one drives down the well-manicured streets outside of Jember in late August, it's difficult to see a house without tobacco drying in the sun. This is the first tobacco crop of the year--there are usually two--and most of the drying tobacco is a type locally called kasturi. It usually is used for cigarette tobacco and locally produced clove-flavored cigarettes. There are almost as many tobacco drying barns around Jember as there are mosques in Indonesia, the world's most populous Muslim country.

Although Indonesia makes cigars, most are small and of uneven quality. The only first-rate premium cigar operation here is owned by the Sweden-based Swedish Match company, which set up a factory three years ago to produce a brand called Montague. Its plant in Pandaan, about a half hour's drive from Surabaya, Indonesia's second largest city, was established with the help of Cuban rollers from the Partagas factory in Havana. It is extremely well organized. If you have ever wondered what a modern, well-financed Cuban factory would look like, the Swedish Match operation is it.

"The Indonesian workers are so meticulous," says project manager Sander Van Hattem, who ran a small factory in the Dominican Republic before coming to Indonesia. "They are motivated workers. It's not just money here that motivates workers like it is in the Caribbean. They have pride in their work. They are slower than rollers in other countries, but their quality is excellent." Van Hattem plans to make about 3 million cigars in Pandaan over the next two years.

With such a strong heritage, it's strange that Indonesian tobacco still lacks respect in the premium cigar world, particularly in the United States, where many consumers and industry insiders consider the tobacco second-rate. Their attitude largely stems from an ignorance of the quality of top Indonesian cigar tobacco; the country produces thousands of bales of excellent quality wrapper, binder and filler from Java and Sumatra.

The largest island of this multi-isle nation, Sumatra boasts a rich wrapper tobacco that is the basis for the Sumatra-seed cigar tobacco now grown in the Dominican Republic, Honduras, Nicaragua and other regions. But because there's not enough quality wrapper to use in premium cigars, producers set aside almost all the Sumatran tobacco grown today for use in machine-made cigars in Europe.

Instead, it is the tobacco grown in East Java, particularly near Jember, that is important to premium cigarmakers. The best of this tobacco is to cigar smokers what Jamaica's Blue Mountain is to coffee drinkers or France's grand cru Pinot Noir is to oenophiles.

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.

Consolidated had taken a major risk in developing TBN in the early 1990s after the company's supply of wrapper from Central Africa became too expensive and variable in quality. Due to internal problems in the tobacco-producing nations of Cameroon and the Central African Republic, as well as poor relations between the African growers and their French backers (who controlled the sale of Central African wrapper), the quality and quantity of African wrapper declined during the 1980s.

"We just couldn't risk our future on the Cameroon wrapper crop at the time," says Gershel. "We had to find an alternative. We liked what we saw with the initial crop of TBN in the late 1980s, so we asked our suppliers to work on it."

According to Indoco's Meskens, whose company supplies virtually all of Consolidated's TBN, Consolidated's request to develop TBN for premium hand-rolled cigars was kept quiet for nearly four years, although many of the European cigar and cigarillo producers had already switched to lower-grade TBN. "We wanted to make sure that we could provide the right amount and the right quality," Meskens recalls. He knew after a couple of years growing TBN that his firm could supply the cigarmaker.

The tobacco is a cross between besuki and Connecticut shade. "We took a hell of a risk," says Gershel, noting that Consolidated first used its TBN on its machine-made cigars, such as Anthonio y Cleopatra, for several years before using the wrapper on such key handmade brands as H. Upmann, Montecruz and Royal Jamaica. "Our competitors couldn't figure out what we were doing, but we wanted to make sure that it would work before we let the world know about it," Gershel says. "By the time we did, we controlled most of the top TBN."

Of course, some competitors see it another way. Many who stuck with Central African tobacco or turned to wrappers from other countries say that they didn't like the quality of TBN. "The wrapper can be brittle and have a bitter and metallic flavor," says one European-based tobacco dealer who wished to remain anonymous. "My customers don't like it." This magazine has found in its tastings that some cigars that supposedly have TBN wrappers do have a metallic and rough quality to them. But Gershel and tobacco men based in Jember rebut these views, saying that a lot of tobacco sold as TBN has been either shade-grown besuki or an inferior tobacco grown outside the region that resembles TBN, called VBN, Voistenlanden bawah naungan, roughly translated, Connecticut-shade grown in Central Java.

"That's not the real thing if it is metallic," says Gershel. "There is no character like that in TBN. We buy TBN because of the taste and the quality and, of course, the consistency of the product. When people knock TBN, it may be out of envy. People knock what they can't get."

One big problem with the image of TBN is that many people thought that it was synonymous with Indonesian wrapper. "The problem was that some people promoted TBN simply as Indonesian, so some tobacco people here in Jember took advantage of that," says Meskens, who has more than two decades of experience in the region. "Some people may have thought they were buying TBN but they were getting whatever was available. Sometimes it was even binder or filler. This hurt the image of the product."

That said, however, Meskens is less concerned about the reputation of TBN and Indonesian tobacco today than he was a year ago. As in many other tobacco-growing regions in the world, the situation in Indonesia is calmer now that the boom days of premium cigar production appear to be over. Tobacco growers and packers can spend more time cultivating and processing their crops. Some companies, such as Tempu Rejo, the tobacco processor that Meskens represents, now have the time to develop new tobacco types as well as experiment with established ones, such as Connecticut shade.

"The boom period for cigars in the U.S. market was not that good of a period if you think about it," says Meskens. "No one could keep up with the demand. It was difficult to maintain your business. Now that the situation is better we can go back to normal. The serious people are the ones still in the business."

Nevertheless, some people continue to look for the quick buck out of Indonesia. Recently, Sin Teguh Wanamarta received a fax from a New York City retailer who was interested in selling a new type of cigar. "He asked us if we could supply him with clove cigars and if we could send samples. His fax said that Americans were looking for 'fancy things' and that clove cigars could be the new fashion," Wanamarta says. "We didn't even answer the fax. Only in New York would they ask for something like that."

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