Adaption and Expansion
Gold Leaf Tobacco tells a story of a local manufacturer competing against international heavyweights in Southern Africa, the company continuing to expand and looking to react to the industry’s changing dynamics
Writer: Tom Wadlow
Project Manager: Vivek Valmiki
Gold Leaf Tobacco Corporation, a South African born manufacturer, began life in 2001 and has steadily expanded since, conducting business in Malawi, the Democratic Republic of Congo, Zambia, Kenya and Zimbabwe.
The company holds distribution rights for Voyager, RG, Chicago, Sahawi, Sharp and Savannah brands, and is a full-service contract manufacturer for various blends and variants of high-quality cigarettes.
In South Africa, Gold Leaf enjoys a market share of around 15-20 percent in terms of sales, employing in excess of 400 people.
The company is operating in an industry which has been transformed by the monumental rise of e-cigarettes and vaping in recent years.
According to a study by Research and Markets, the e-cigarette market is estimated to reach $44.6 billion by 2023, this demand driven by factors such as increasing health concerns among smokers, demand for smokeless and ashless vaping, and surge in the number of vape shops and designated stores.
It is a trend which has forced traditional manufacturers to adapt, although in Africa the full effect of vaping models is yet to be felt.
“Whilst these devices have not yet fully made their way to Africa on such a large scale, mostly due to their costly attributes, the tobacco market has nonetheless slowed down over the years,” explains Ismail Khan, General Manager of Operations for Gold Leaf.
“Having said this, as a manufacturer, one is required to constantly mould and develop the products which are sold, and in this regard we have introduced various flavours across our cigarette range such as apple-mint, orange-mint, peppermint, cherry-mint, grape-mint and a few others.”
Khan joined the business in 2006 in anticipation of a new challenge. “This was a chance to build myself as an individual,” he says.
“The team at Gold Leaf have been acquiring experience and expertise to ensure that they have sufficient skills, capacity and capability to build on the business and take it to Africa and the rest of the world. This vision inspired me, and I was glad to accept the opportunity as Gold Leaf viewed me as a dynamic asset to their business.”
On top of this vision, Gold Leaf’s commitment to producing a quality product also appealed to Khan, this being a key differentiator for the company in his eyes.
“This allows us to gain a competitive edge and sense of satisfaction so that our consumers are 100 percent satisfied with the products that they purchase,” he adds.
Expansion and adaptation
As well as introducing new flavours to stay ahead of the market, Khan confirms that Gold Leaf is strongly evaluating the possibility of diversifying into the e-cigarette and vaping arena.
He cites stricter industry-wide health regulations which are implemented globally, and how these, along with shifts in consumer behaviour, could see this subcategory take off not only in South Africa, but the wider continent.
“It’s something which is being considered and we believe that it may well capture a very large share of the cigarette market,” says Khan. “It is very important for us to evolve with the times and ensure that our commitment to quality extends into the evolution of the business.
“Research and development is hence key to running a successful business. We regularly do tests on our tobaccos and are constantly monitoring market trends to assess whether particular flavours are more in demand and what the consumer is looking for.”
Asides an evolving and growing product range, the concept of expansion can be applied geographically, with Gold Leaf having extended its manufacturing operations into Malawi, the DRC and Zimbabwe.
“These sites are very young and of course not nearly as large as the South African division,” Khan continues. “Having said this, we are focusing a lot of energies into spreading Gold Leaf to these areas and taking these businesses to new heights.”
Khan is also keen to stress the importance of staff development and knowledge transfer in determining the future path of the business.
Indeed, a key part of Gold Leaf’s stated corporate values comprises cooperation and teamwork, factors which enable it to act ethically and respectfully.
“We believe that knowledge is there to be shared,” Khan adds. “Skills and technical expertise which can be passed on by the management of Gold Leaf to its employees can only better the future of the company.
“With this philosophy in mind, our employees are comfortable that they are being trained and upskilled without hesitation, and therefore the trust relationship between management and employees is solidified.”
Further, such training is extended to local disadvantaged people in the areas surrounding its factory in Linbro park Sandton, Johannesburg.
“We provide these people with the necessary skillset to operate in a tobacco factory, with the objective of either employing them or empowering them to find alternative employment,” Khan says.
By investing in the future both in terms of people and product, Gold Leaf appears well set to expand its market share both at home in South Africa and further afield.