HomeBusiness DigestTobacco firm counts heavy losses

Tobacco firm counts heavy losses

ZIMBABWEAN tobacco manufacturer Gold Leaf Tobacco (GLT) suffered losses of US$800 000 after being compelled to recall stocks from the market and destroy material after the High Court barred the company from packaging and distributing cigarettes bearing the RG brand, a company official has said.

Taurai Mangudhla

The High Court in September last year barred GLT from distributing its cigarettes a month after unveiling the new brand on grounds it prejudiced competitors, Savannah Tobacco, which is licenced to manufacture the Remington Gold brand of cigarettes locally. The Remmington Gold brand is also shortened as RG.

GLT has however challenged the court decision, but re-launched its cigarettes as Rudland & George on Wednesday in Harare.

GLT country manager Tanaka Matimbe told the launch the greatest cost of the court ruling was disruption to business.

“The greatest cost has been a disruption in business because we had to pull down our marketing communication material, we had to pull down our product from the shops to comply with the court interdict. The bulk of it is the cost of the duties that we had paid on the cigarettes as we brought it into the country,” Matimbe said.

“The cost of rebranding and basically redesigning or packaging development and launching the product back on the market, so that’s a huge cost and we are looking at over US$800 00 in terms of the investment that went down the drain.”

The return of GLT means the company will battle it out with its stronger competitors such as Savannah Tobacco, the manufactures of the Pacific Brand of cigarettes and listed BAT, the manufacturers of Madison toasted cigarettes and other strong brands.

The two had enjoyed a lion’s share of the Zimbabwean market, battling against imports which are often more expensive except in instances where they are smuggled. GLT is targeting 20% market share in Zimbabwe.

“We firmly believe we have to get back to business and focus on what we do best which we do best, which is selling cigarettes. We believe there is room for everyone to play in the market and we see ourselves growing very well in the next 12 to 18 months,” Matimbe said. “We are here for the long haul (and) we are setting up to be the biggest supplier in southern Africa and the rest of Africa.”

Currently the Rudland & George cigarettes are being produced in Johannesburg through GLT’s sister company. However, plans to start setting up a manufacturing plant in Harare are underway.

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