B&W Executive Talks With Farmers About Difficult Year, Reasons for Optimism
LOUISVILLE, Ky., Dec. 6 /PRNewswire/ -- Brown & Williamson Tobacco Corporation has told tobacco farmers gathered at the Kentucky Farm Bureau annual meeting here that despite a difficult year, the tobacco industry has reason for optimism.
``It would be difficult, if not impossible to tell you the short-term outlook for our industry is as positive as all of us would like, but we do have reasons to be optimistic,'' said Earl Kohnhorst, president of U.S. domestic business for the Louisville-based tobacco manufacturer.
For the state and its tobacco growers, funds from the settlement the manufacturers reached with the states last year will soon begin flowing, he said. Kentucky will receive some $3.4 billion over the next 25 years. Decisions on spending will be made by the Kentucky General Assembly. In addition, Kohnhorst said, the manufacturers -- realizing the impact of the settlement on the growing community -- agreed to a $5.1 billion growers' trust fund to help offset lost profits on quota to tobacco farmers. Kentucky's share is about $1.5 billion.
Turning to some of the reasons why Brown & Williamson remains optimistic, Kohnhorst cited three major areas:
* "First, we are optimistic because our company and our employees are driven to be successful. I cannot overstate the view that Brown & Williamson is in this business for the long term. Yes, we are going to experience some bumpy roads over the next year or two as the cigarette market re-defines itself. But we are continuing to invest for the future.
* "Second, we expect domestic volumes to improve. Our projections show the current decline will slow and an uptick in consumption may not be
too far down the road. So we must invest to grow our share of the market.
*"Third, there is little doubt the international cigarette market will continue to grow. That means that quality U.S. leaf will be in demand. The challenge is yours to continue to grow and market quality burley that will be competitive in the global environment.
``For Brown & Williamson, in particular,'' Kohnhorst said, ``the commitment of our parent company, British American Tobacco, to the tobacco side of the business is significant. BAT is the largest free-standing tobacco company in the world and the most international tobacco company. This is a vote of confidence for tobacco and our future.
``Yes, these are challenging times for tobacco,'' he said. ``The combination of litigation, regulation and political pressure has had a major impact on the tobacco companies, consumers and you, the growers.
``On top of all this, we here in Kentucky have faced a particularly difficult year,'' he said. ``I'm tempted to quote that old adage 'when it rains, it pours.' Unfortunately, that's just the problem. Not only did it not pour, it very nearly didn't rain at all. Our burley was seeded in a drought, grown in a drought and harvested in a drought. It is utterly amazing that Kentucky farmers have been able to bring this crop to market -- and that it is as good as it is. If there is any consolation, it is that this crop is selling at around the same price as last year. But that is small consolation, I know, given that the companies are not purchasing as much as last year.''
Kohnhorst noted that domestic cigarette sales are down about 10 percent and that some overseas markets have not recovered as quickly as anticipated. But among the things Brown & Williamson is doing to help domestic farmers, Kohnhorst said, is to substantially reduce its importation of overseas tobacco. B&W's export leaf company also is continuing to try to expand leaf sales overseas as well.
Brown & Williamson Tobacco Corporation is the nation's third largest tobacco manufacturer. Its major brands include KOOL, Lucky Strike, GPC and Misty. For more information about the company and the tobacco industry, visit www.brownandwilliamson.com