It was a perfect storm for innovation: The price of tobacco products, the volatility of supply, the monopoly of the industry production pipeline and global markets came together in less than a decade to put sustainable cigarette manufacturing on the front burner. The simple fact of the matter is that when Savanna Tobacco Company entered the market from a paltry threshing operation on the outskirts of Harare a decade ago, few imagined a successful enterprise fanning out across cities and towns of Zimbabwe, into neighbouring markets in the region and internationally.
It was even harder to imagine in a context of massive trade imbalances, haemorrhaging interest rates and hyperinflation on the back of a beleaguered currency, so much so that critics of the country’s indigenisation policy were tempted to find explanations for the spectacular success of Zimbabwe’s tobacco manufacturing output in “illegal cigarettes”. After all, the state of the Zimbabwean economy at the outset of the government’s indigenisation drive was hardly a postcard image of optimism.
Tight markets in an industry historically controlled by a handful of global behemoths made things worse. So when Savanna made its debut there were daunting impediments to competing in an industry where production costs and pricing made no sense for smaller players contemplating their prospects. But, as always, there’s a silver lining for forward-looking companies savvy enough to see it. Within the first two years of operation, the company sold over three million kilogrammes of farm stems.
The directors of Savanna by this time had already identified an opportunity to add value to Zimbabwean tobacco by manufacturing quality cigarettes for the export market. That was only one part of a bigger success story, however. Formed in 2002 when Savanna purchased the Harare threshing plant, reconditioned plant machinery, started processing, packaging cigarette stems and selling them to a number of cigarette factories around the world, the company has become an emblem and harbinger of innovation. Having evolved over the past 10 years into a significant producer of tobacco products and brands in Zimbabwe, increasing its average monthly output from 3 000 master cartons in 2004 to between 35 000 and 40 000 master cartons per month, the spinoffs for a previously excluded market segment have been considerable.
Once Savanna had won a license to produce cigarettes, its early pioneers knew well that today’s tobacco industry presents challenges, but also munificent opportunities for those who care to look. From that point onwards it was a quantum leap to becoming a key innovator in the sector. The logic was brilliant in its simplicity: While demand for quality products will eventually grow, so, too, will the demand for innovation and sustainability.
The real challenge was to circumvent onerous pricing models and gain market share. Yet, there was in Savanna’s early days a keen sense that saving money was just for starters. If the bottom line was important, so too were people, the company’s founders decided. They reasoned that the big business case for innovation is that there is, indeed, big business in innovation for companies that go about it wisely.
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