Despite all contradictions, the tobacco industry is one of the major sectors of global economy and a vital factor of economic welfare of many countries. And all this is because billions of cigarettes are being smoked globally every day. The number ranges from 15 to 20 billion by various estimates.

The annual consumption of cigarettes in Armenia makes over 5 billion, which means approximately 14 million smoked cigarettes per day. Despite the fact that smoking is considered a bad habit and the governments of many countries fight with it using various methods, the multi-million army of smokers is not going to say goodbye to cigarettes, thus backing the tobacco industry.

Living and working in Armenia we, the journalists, cover the activity of small businesses and are far from realizing what the competition, not on the local but on the global market, implies. It’s quite different thing to visit a large industrial enterprise of one of the three global tobacco leaders, where you can feel what it means to compete on the global market and to innovate constantly in order to maintain your positions and increase the market share.

In December 2012, a group of Armenian journalists, including the correspondent of Mediamax News Agency, visited “Petro” Tobacco Factory in St. Petersburg, which is Russia’s largest tobacco factory and the largest industrial complex of the international subdivision of the third largest global tobacco company - Japan Tobacco (JT Group). The production of Japan Tobacco International (JTI) is represented on the Armenian market by four cigarette brand families: Camel, Winston, Sobranie and Monte Carlo. According to the data by AC Nielsen for September-October 2012, the share of JTI on the Armenian tobacco market exceeds 12.5%.

JTI is the sales leader on the Russian market, and it is not surprising that the company’s largest factory is located in Russia. The factory accounts for about 90 of 400 billion cigarettes produced in Russia annually. “Petro” is one of three plants of JTI, which supplies tobacco products to the Armenian market. The other two factories are located in the Ukrainian city of Kremenchug and in Moscow (“Liggett-Ducat” factory).

Alexei Belogurov, JTI Russia North-West region Corporate Affairs and Communications Director, presented the global statistics of JTI: the company employs 25 000 people, it provides workplaces in 69 countries worldwide, the company’s brands are sold in 120 countries, it comprises 22 tobacco producing factories, 5 tobacco processing plants and 6 research and development centers. In Russia, JTI has 4 factories: “Petro” and “Ligget-Ducat” producing cigarettes, “Kres Neva” and “JTI Yelets” (tobacco blend components).

“Petro” produces such JTI’s world famous brands as Winston, Mild Seven and Camel, as well as Salem, Wings, More, Magna “Russian Style”, “Peter I”, “Nasha Prima” and legendary “Belomorkanal”. The cigarettes produced at “Petro” are supplied to 18 countries worldwide and to duty-free shops.

The Armenian journalists also saw the whole production process and were allowed to see all the stages of cigarette production- from getting packs with tobacco leaves from various countries up to boxes with cigarette cartons ready for shipment. The plant, which employs 1450 people, has the most modern equipment. JTI total investments at “Petro” since 1999 have made over $840mln. For example, in 2008, JTI established an ultra high-speed production line here which produces 20 000 cigarettes per minute. The volume of investments in development and installation of this line totaled $18mln. Today, “Petro” already has 4 such lines installed.

From the first glance it can be seen that the work at the factory is automated and the main function of the operators and mechanics is the control over the work of modern machines.

Besides the strict control over the production quality, the basic factor in maintaining the competitiveness of the enterprise is to ensure safety of employees and minimize the staff turnover.

Alexei Belogurov proudly told us that accidents don’t happen at the factory and in 2012 there were no injuries at all, even small ones.

The factory has a management system, which envisages constant feedback between the staff and the management. Thus, the factory has a system of proposals through which any staff member can voice his idea aimed at the improvement of any area of the enterprise - from labor protection to efficiency increase. In 2012, the factory received 4815 proposals from the personnel, 70% of which was taken into consideration and later introduced. It turns out that each of 1.5 thousand employees makes an average of 3 proposals a year, 2 of which are being implemented, which is a unique achievement.

“The company provides life and health insurance to its employees, voluntary medical insurance as well as a corporate pension system schemes. As a result of effective management, the voluntary staff turnover at the factory is less than 1%,” Alexei Belogurov said.

“Petro” strives to be responsible to the city and the country where it operates. JTI finances dozens of cultural and social projects, such as support to the State Hermitage Museum and Mariinsky Theater.  Alexei Belogurov also said that the factory has frequently been named one of the best taxpayers of St. Petersburg.

It turns out that the corporate policy of the company, which produces “contradictory” production, is far from contradictions. The example of “Petro” proves that the tobacco business is often much more responsible and conscientious and can serve as an example for other sectors of the economy.

Ruben Harutyunyan