CHARLOTTE, N.C. - Chances are good the cigarettes dangling from the lips of Tokyo teen-agers came from the Carolinas in one form or another.
Japan is the Carolina tobacco industry's single biggest customer, both for the leaves grown in the heartland and the cigarettes rolling off the lines in the manufacturing plants.
For an illustration of the Japanese market's importance, look no further than the Philip Morris Cabarrus manufacturing plant, 20 miles north of Charlotte.
Here, in highly secured areas hidden behind tall screens, cigarettes are formulated, packaged and packed in boxes to be shipped to Japan. About one-quarter of the 137 billion cigarettes the plant produces yearly goes to Japan and other foreign countries, plant officials say.
Security is tight because it's here packs are stamped - signifying import taxes are properly paid - and because the foreign business is considered highly competitive, say officials.
$400 million expansion
The Cabarrus plant is in the middle of a $400 million expansion that will increase its capacity to produce up to 165 billion cigarettes yearly. "This expansion gives Philip Morris worldwide production flexibility to meet increasing global demand for our cigarettes," says Elizabeth Cho, a company spokeswoman.
But the Cabarrus plant and even the Japanese market are just cogs in the increasingly complex global machinery, as Philip Morris and other large cigarette makers rush to plant American flags in ever more remote corners of the world.
Philip Morris, Winston-Salem's R.J. Reynolds Tobacco Co. and Louisville-based Brown & Williamson Tobacco Co. all have far-flung empires, not just for marketing cigarettes, but for growing tobacco and manufacturing their products as well.
All three companies are firmly entrenched in the Carolinas. In addition to the Philip Morris plant in Cabarrus, there are two R.J. Reynolds plants and other facilities near Winston-Salem and a Brown & Williamson tobacco processing plant in Wilson. The three companies employ thousands of Carolina workers and buy huge quantities of homegrown tobacco each year.
Japan gets close to one-third of the U.S. cigarettes shipped abroad each year, and its giant cigarette maker, Japan Tobacco, is the No. 1 foreign buyer of Carolina leaf. Japan Tobacco exports cigarettes to about 40 other countries in the Pacific.
Implications of shift
What the shift abroad ultimately means for the Carolina tobacco economy may be sobering, says Peter Burr, an agricultural economist with the U.S. Department of Agriculture.
"The export market is the growing market," he says. "U.S. companies are likely to look harder at their operations abroad and produce fewer cigarettes here."
He also predicts a continued and steady decline in tobacco- growing in states such as the Carolinas that produce premium tobacco at premium prices.
"Companies can buy local tobacco in the countries where they sell, which is cheaper," Burr says. "A lot of the growth markets are in areas where they have to produce cheaper cigarettes anyway."
A growing pattern, say market experts, is that more affluent countries get most of the American-made cigarettes, while poorer countries, like the former Soviet-bloc countries, get U.S. brands made overseas.
"Seventy percent of the U.S. exports go to Japan, where they stay, or to Belgium, where they're transshipped, mostly to other European countries," says Burr.
Cigarette makers say the increase in overseas manufacturing doesn't necessarily mean less demand for tobacco grown in the Carolinas or cigarettes manufactured here.
"The increasing demand for our cigarettes seems to indicate there's a bright future for U.S. growers and manufacturers," says Cho of Philip Morris. "The whole pie has gotten bigger. We are manufacturing more overseas, but we're also exporting more. The whole business is growing."
All three U.S. companies that sell overseas have reported double-digit increases in international volume for the last several years.
Philip Morris, the world's largest multinational cigarette company, last year sold 230 billion cigarettes in the United States and 660 billion cigarettes abroad, according to the
company's 1996 annual report.
The world's smokers puffed nearly 460 billion Marlboros, making it the top-selling international cigarette.
In all, three U.S. cigarette makers shipped a total of 244 billion American-made cigarettes to other countries, according to USDA statistics.
That's less than half of what Philip Morris sold abroad, underlining the shift to manufacturing as well as selling more cigarettes overseas.
Philip Morris owns or leases 47 plants abroad, while Reynolds has more than 20, according to officials.
Smokers in developing countries looking for the cachet of American cigarettes are more likely to get a less expensive - and homegrown - version of the U.S. brand.
"If you're selling cigarettes in a lesser-developed country, you could put anything in a cigarette pack and there wouldn't be anyone to ever check it," Burr explains.
