Required Report - public distribution

**Date:** 7/16/2004

**GAIN Report Number:** NL4020

NL4020

**Netherlands**

**Tobacco and Products**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Roger Wentzel

U.S. Embassy, The Hague

**Prepared by:**

Bob Flach

**Report Highlights:** Since 2002, Brazil replaced the United Stated as
the main tobacco supplier to the Dutch market. Due to the increasing
Brazilian production of Virginia tobacco varieties this trend is
expected to continue.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

The Hague \[NL1\]

\[NL\]

**Executive Summary**

The Netherlands is one of the main tobacco importing and processing
countries in the world. In general, annual imports of tobacco fluctuate
between 100,000 MT and 110,000 MT. Since 2002, Brazil replaced the US as
the main tobacco supplier to the Dutch market. Due to the increasing
Brazilian production of Virginia tobacco varieties this trend is
expected to continue. In 2004, the import and consumption of flue-cured
tobacco is expected decline in response to a lower cigarette production
in The Netherlands. Dutch imports of burley and dark air and sun cured
tobacco is expected to stabilize or increase slightly as a consequence
of increased production of roll-your-own tobacco and cigars.

Conversion rates:

1997 Euro 1.00 = US\$ 1.16, 1998 Euro 1.00 = US\$ 1.08, 1999 Euro 1.00 =
US\$ 1.06, 2000 Euro 1.00 = US\$ 0.92, 2001 Euro 1.00 = US\$ 0.90, 2002
Euro 1.00 = US\$ 0.95, 2003 Euro 1.00 = US\$ 1.12

Production

In The Netherlands, tobacco production is negligible. The Netherlands is
one of the main tobacco importing and processing countries in the world.
Currently, there are 20 tobacco processing companies with annual sales
of about Euro 4.8 billion. About 5,700 people are employed in the Dutch
tobacco industry. Indirectly, about 25,000 work in distribution,
wholesale, retail and advertising.

## Cigarettes

The Netherlands is reportedly the second largest cigarette producer in
the world. During 2003, Dutch cigarette production declined by nine
percent to 115 billion, mainly due to lower exports to Italy and France.
The two largest cigarette manufacturers in the Netherlands are BAT
Manufacturing B.V. and Philip Morris Holland B.V. Currently, Phillip
Morris is responsible for about 40 percent of cigarette production in
The Netherlands, of which about 95 percent is exported.

The two major Dutch cigarette manufacturers are:

+-----------------------------------------------------------------------+
| **B.A.T. Manufacturing Nederland b.v.**                               |
|                                                                       |
| Kerkstraat 27                                                         |
|                                                                       |
| 6901 AA Zevenaar                                                      |
|                                                                       |
| Tel. 31‑316‑590911                                                    |
+-----------------------------------------------------------------------+
| **Philip Morris**                                                     |
|                                                                       |
| Groenelaan 5                                                          |
|                                                                       |
| 1186 AA Amstelveen                                                    |
|                                                                       |
| Tel. 31‑20-6564100                                                    |
+-----------------------------------------------------------------------+

Since the Dutch tobacco industry has extensive production of cigar and
cut tobacco (roll-your-own, pipe- and chewing tobacco) production, a
brief overview of these products follows.

## Cigars

Dutch cigar production increased steadily from 1.8 billion cigars in
1996 to 2.4 billion in 2002. The Netherlands is the second largest cigar
manufacturer in the world after the United States. A substantial part of
Dutch cigars are partially processed by affiliates located just across
the Belgian border, in Ireland and even Sri Lanka.

## Smoking and Cut Tobacco

The Netherlands is by far the largest producer of roll‑your‑own tobacco
in Europe although it is also produced in the U.K., Germany, Norway,
Denmark and France. Production of roll-your-own, pipe and chewing
tobacco had been stable at about 30,000 MT between 1997 and 2001, but
increased during the last two years to 32,400 MT in 2003.

**Trade**

The Netherlands is one of the main tobacco importers in the world. In
general, Dutch imports of tobacco fluctuate between 100,000 MT and
110,000 MT. During 2001, 2002 and 2003, imports of unstemmed and
unstripped tobacco increased by about 5,000 MT to 34,500 MT. During the
past two years, imports of stemmed and stripped tobacco have been stable
at about 67,000 MT. The remaining import volume of about 8,000 MT
consists of tobacco waste.

Since 2000, Dutch imports of US tobacco declined from 35,000 MT to
16,500 MT in 2003. During 2002 and 2003, Brazil replaced the US as the
main tobacco supplier to the Dutch market with a volume of 27,000 MT.
The U.S. lost market share for stemmed and stripped tobacco, in
particular the varieties Flue Cured Virginia and Light Air Cured Burley.
Trade sources informed FAS/The Hague that, due to the lower price,
Brazilian tobacco was preferred over tobacco produced in the U.S. This
trend is expected to continue because Brazil increased the acreage for
Virginia production in 2004. Despite declining sales, U.S. tobacco
remains the preferred tobacco for Dutch tobacco product manufacturers,
especially if the prices for U.S. tobacco are competitive with prices
for tobacco from Brazil and other low cost producers. Other important
exporters to The Netherlands are: other EU member states, 25 percent of
the market, and Malawi, India, Mozambique and Argentina with each about
5 percent of the Dutch market. Indonesia is, with the U.S., one of the
high value tobacco suppliers to the Dutch market. During the past four
years, Dutch tobacco imports from Zimbabwe declined from twelve percent
to three percent of the market.

## Flue Cured

For the production of cigarettes, mainly flue‑cured tobacco is used.
During the past three years, Dutch imports of flue-cured tobacco
averaged around 48,000 MT per year. In general, about 2,000 MT of
flue-cured tobacco is re-exported by The Netherlands. In 2003, domestic
consumption of flue-cured tobacco declined possibly due to shrinking
cigarette production in The Netherlands. In response to surging illegal
imports of tobacco and tobacco products, it is likely that Dutch
cigarette production and consumption of flue-cured tobacco will decline
further in 2004. On May 1, 2004, the European Union (EU-15) was enlarged
with ten new member states to the EU-25. Since that date western
European countries have reportedly been flooded with illegal tobacco
imports from the new member states and Belarus.

## Burley

Burley tobacco is considered almost indispensable for making the
roll‑your‑own or \"shag\" tobacco, which is very popular in the
Netherlands. Burley tobacco is also used in cigarette blends. In
general, Dutch imports of burley tobacco fluctuate between 15,000 and
20,000 MT. In general, less than 1,000 MT of burley tobacco is
re-exported by The Netherlands. Considering the expanding production of
cut tobacco, it is anticipated that burley tobacco imports will at least
remain about 15,000 MT.

## Dark Air and Sun Cured

Dark air and sun-cured tobacco are used for the production of cigars. In
general, Dutch imports of dark air and sun-cured tobacco fluctuate
between 3,000 MT and 4,000 MT. Taking into account the growing cigar
production in The Netherlands, it is not expected that Dutch imports of
these tobacco type will decline below 3,000 MT.

## Oriental

# Oriental tobacco is mainly used for adding a strong flavor to cigarette blends. In general, Dutch imports of oriental tobacco fluctuate around 12,000 MT. Greece and Turkey are the main suppliers of Oriental tobacco to the Dutch market. 

# Statistical Tables

Trade figures: World Trade Atlas (based on CBS and EUROSTAT figures)

Production and consumption figures: Central Bureau for Statistics and
Association of the Cigarette Industry and Dutch Cigar Manufacturers
Association

  ----------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country                                                                  
  Netherlands                                                              

  Commodity                                                                
  Tobacco, Unmfg.,                                                         
  Total (HA)(MT)                                                           

                    2002       Revised    2003       Estimate   2004       Forecast

                    USDA       Post       USDA       Post       USDA       Post
                    Official   Estimate   Official   Estimate   Official   Estimate
                    \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin            01/2002               01/2003               01/2004

  Area Planted      0          0          0          0          0          0

  Beginning Stocks  12,000     12,000     9,000      9,964      8,929      10,970

  Farm Sales Weight 0          0          0          0          0          0
  Prod                                                                     

  Dry Weight        0          0          0          0          0          0
  Production                                                               

  U.S. Leaf Imports 0          17,747     0          16,527     0          15,700

  Other Foreign     101,929    87,765     101,929    93,212     101,929    82,300
  Imports                                                                  

  TOTAL Imports     101,929    105,512    101,929    109,739    101,929    98,000

  TOTAL SUPPLY      113,929    117,512    110,929    119,703    110,858    108,970

  Exports           21,476     22,948     22,000     18,933     22,000     20,400

  Dom. Leaf         0          0          0          0          0          0
  Consumption                                                              

  U.S. Leaf Dom.    39,453     16,300     40,000     14,600     40,000     13,800
  Consum.                                                                  

  Other Foreign     44,000     68,300     40,000     75,200     40,000     70,300
  Consump.                                                                 

  TOTAL Dom.        83,453     84,600     80,000     89,800     80,000     84,100
  Consumption                                                              

  TOTAL             104,929    107,548    102,000    108,733    102,000    104,500
  Disappearance                                                            

  Ending Stocks     9,000      9,964      8,929      10,970     8,858      4,470

  TOTAL             113,929    117,512    110,929    119,703    110,858    108,970
  DISTRIBUTION                                                             
  ----------------- ---------- ---------- ---------- ---------- ---------- ----------

  --------------------- ----------- ---------- ---------- ---------- ---------- ----------
  Country Netherlands                                                           

  Commodity                                                                     
  Tobacco,Unmfg.,Flue                                                           
  Cured (HA)(MT)                                                                

                        2002        Revised    2003       Estimate   2004       Forecast

                        USDA        Post       USDA       Post       USDA       Post
                        Official    Estimate   Official   Estimate   Official   Estimate
                        \[Old\]     \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin                 01/2002               01/2003               01/2004

  Area Planted          0           0          0          0          0          0

  Beginning Stocks      0           3,000      0          507        0          1,995

  Farm Sales Weight     0           0          0          0          0          0
  Prod                                                                          

  Dry Weight Production 0           0          0          0          0          0

  U.S. Leaf Imports     0           8,258      0          7,736      0          7,500

  Other Foreign Imports 0           39,233     0          40,762     0          36,000

  TOTAL Imports         0           47,491     0          48,498     0          43,500

  TOTAL SUPPLY          0           50,491     0          49,005     0          45,495

  Exports               0           2,984      0          1,910      0          1,800

  Dom. Leaf Consumption 0           0          0          0          0          0

  U.S. Leaf Dom.        0           7,800      0          7,300      0          7,000
  Consum.                                                                       

  Other Foreign         0           39,200     0          37,800     0          36,200
  Consump.                                                                      

  TOTAL Dom.            0           47,000     0          45,100     0          43,200
  Consumption                                                                   

  TOTAL Disappearance   0           49,984     0          47,010     0          45,000

  Ending Stocks         0           507        0          1,995      0          495

  TOTAL DISTRIBUTION    0           50,491     0          49,005     0          45,495
  --------------------- ----------- ---------- ---------- ---------- ---------- ----------

  ---------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country                                                                 
  Netherlands                                                             

  Commodity                                                               
  Tobacco, Unmfg.,                                                        
  Burley (HA)(MT)                                                         

                   2002       Revised    2003       Estimate   2004       Forecast

                   USDA       Post       USDA       Post       USDA       Post
                   Official   Estimate   Official   Estimate   Official   Estimate
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year                 01/2002               01/2003               01/2004
  Begin                                                                   

  Area Planted     0          0          0          0          0          0

  Beginning Stocks 0          4,142      0          3,975      0          2,498

  Farm Sales       0          0          0          0          0          0
  Weight Prod                                                             

  Dry Weight       0          0          0          0          0          0
  Production                                                              

  U.S. Leaf        0          6,344      0          5,437      0          5,000
  Imports                                                                 

  Other Foreign    0          11,351     0          10,063     0          10,000
  Imports                                                                 

  TOTAL Imports    0          17,695     0          15,500     0          15,000

  TOTAL SUPPLY     0          21,837     0          19,475     0          17,498

  Exports          0          1,662      0          777        0          750

  Dom. Leaf        0          0          0          0          0          0
  Consumption                                                             

  U.S. Leaf Dom.   0          6,000      0          5,100      0          4,700
  Consum.                                                                 

  Other Foreign    0          10,200     0          11,100     0          11,600
  Consump.                                                                

  TOTAL Dom.       0          16,200     0          16,200     0          16,300
  Consumption                                                             

  TOTAL            0          17,862     0          16,977     0          17,050
  Disappearance                                                           

  Ending Stocks    0          3,975      0          2,498      0          448

  TOTAL            0          21,837     0          19,475     0          17,498
  DISTRIBUTION                                                            
  ---------------- ---------- ---------- ---------- ---------- ---------- ----------

  ----------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country                                                                  
  Netherlands                                                              

  Commodity                                                                
  Unmfg.,Dark Air &                                                        
  Sun Cured                                                                
  (HA)(MT)                                                                 

                    2002       Revised    2003       Estimate   2004       Forecast

                    USDA       Post       USDA       Post       USDA       Post
                    Official   Estimate   Official   Estimate   Official   Estimate
                    \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin            01/2002               01/2003               01/2004

  Area Planted      0          0          0          0          0          0

  Beginning Stocks  0          4,600      0          4,304      0          3,696

  Farm Sales Weight 0          0          0          0          0          0
  Prod                                                                     

  Dry Weight        0          0          0          0          0          0
  Production                                                               

  U.S. Leaf Imports 0          0          0          0          0          0

  Other Foreign     0          3,903      0          3,122      0          3,000
  Imports                                                                  

  TOTAL Imports     0          3,903      0          3,122      0          3,000

  TOTAL SUPPLY      0          8,503      0          7,426      0          6,696

  Exports           0          1,699      0          1,130      0          1,200

  Dom. Leaf         0          0          0          0          0          0
  Consumption                                                              

  U.S. Leaf Dom.    0          0          0          0          0          0
  Consum.                                                                  

  Other Foreign     0          2,500      0          2,600      0          2,650
  Consump.                                                                 

  TOTAL Dom.        0          2,500      0          2,600      0          2,650
  Consumption                                                              

  TOTAL             0          4,199      0          3,730      0          3,850
  Disappearance                                                            

  Ending Stocks     0          4,304      0          3,696      0          2,846

  TOTAL             0          8,503      0          7,426      0          6,696
  DISTRIBUTION                                                             
  ----------------- ---------- ---------- ---------- ---------- ---------- ----------

  ---------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country                                                                 
  Netherlands                                                             

  Commodity                                                               
  Tobacco, Unmfg.,                                                        
  Oriental                                                                
  (HA)(MT)                                                                

                   2002       Revised    2003       Estimate   2004       Forecast

                   USDA       Post       USDA       Post       USDA       Post
                   Official   Estimate   Official   Estimate   Official   Estimate
                   \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year                 01/2002               01/2003               01/2004
  Begin                                                                   

  Area Planted     0          0          0          0          0          0

  Beginning Stocks 0          2,287      0          206        0          1,436

  Farm Sales       0          0          0          0          0          0
  Weight Prod                                                             

  Dry Weight       0          0          0          0          0          0
  Production                                                              

  U.S. Leaf        0          0          0          0          0          0
  Imports                                                                 

  Other Foreign    0          10,844     0          12,864     0          10,000
  Imports                                                                 

  TOTAL Imports    0          10,844     0          12,864     0          10,000

  TOTAL SUPPLY     0          13,131     0          13,070     0          11,436

  Exports          0          2,625      0          1,434      0          1,900

  Dom. Leaf        0          0          0          0          0          0
  Consumption                                                             

  U.S. Leaf Dom.   0          0          0          0          0          0
  Consum.                                                                 

  Other Foreign    0          10,300     0          10,200     0          9,500
  Consump.                                                                

  TOTAL Dom.       0          10,300     0          10,200     0          9,500
  Consumption                                                             

  TOTAL            0          12,925     0          11,634     0          11,400
  Disappearance                                                           

  Ending Stocks    0          206        0          1,436      0          36

  TOTAL            0          13,131     0          13,070     0          11,436
  DISTRIBUTION                                                            
  ---------------- ---------- ---------- ---------- ---------- ---------- ----------

  --------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country                                                                
  Netherlands                                                            

  Commodity                                                              
  Tobacco, Mfg.,                                                         
  Cigarettes (MIL                                                        
  PCS)                                                                   

                  2002       Revised    2003       Estimate   2004       Forecast

                  USDA       Post       USDA       Post       USDA       Post
                  Official   Estimate   Official   Estimate   Official   Estimate
                  \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year                01/2002               01/2003               01/2004
  Begin                                                                  

  Filter          112,292    112,292    113,000    102,061    0          100,000
  Production                                                             

  Non-Filter      14,000     14,000     13,500     13,500     0          10,000
  Production                                                             

  TOTAL           126,292    126,292    126,500    115,561    0          110,000
  Production                                                             

  Imports         34,031     34,586     35,000     14,765     0          15,000

  TOTAL SUPPLY    160,323    160,878    161,500    130,326    0          125,000

  Exports         134,458    135,013    135,500    104,826    0          100,000

  Domestic        25,865     25,865     26,000     25,500     0          25,000
  Consumption                                                            

  TOTAL           160,323    160,878    161,500    130,326    0          125,000
  DISTRIBUTION                                                           
  --------------- ---------- ---------- ---------- ---------- ---------- ----------