Value Chains
About Value ChainsThe Tobacco Value Chain
This value chain shown here, in addition to depicting the key stages in the farming of the tobacco leaves, demonstrates the extensive product warehousing and distribution infrastructure that primarily leads to the production of tobacco in the form of cigarettes in North Carolina. Additionally, the role of public relations and public policy is increasingly important to the tobacco industry as value chain actors seek to accommodate the growing health concerns about its products.
Map - North Carolina's Tobacco Companies, 2007
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This industry has experienced the growing importance of international sales and marketing efforts, often connected to overseas production and distribution operations, giving added importance to the role of logistics. In recent years, much of the harvesting and curing stages of tobacco production have been shipped overseas due to lower raw material costs and cheaper labor. Countries such as Brazil, Taiwan, and the Philippines are all known as large centers for tobacco growing and exportation. Cigarette lobbyists in these countries testify that tobacco trade creates jobs and benefits their local economies. As tobacco is becoming a more global market, large American companies, such as Philip Morris, have developed international branches in order to take part in this continuously demanding market.
As described by The Nation, the tobacco industry has become one of the most globalized on the planet.1 More cigarettes are traded than any other single product; some one trillion "sticks," as they are known in the business, pass international borders each year. As a result, American brands have been propelled into every corner of the world, with just four companies controlling 70% of the global market (refer to the Corporations section for more information). With declining sales in the United States, foreign markets have become increasingly critical to the U.S. tobacco companies' financial health. Top American tobacco firms now earn more from cigarettes sold abroad than from those sold domestically.
References
- Mark Schapiro, "Big Tobacco." The Nation, April 18, 2002, pp. 11-19.
