Usually tobacco manufacturers make the headlines for all the wrong reasons, however you will be surprised to find out that one particular company is being hailed by the newspapers in an EU member state as being an exemplary employer, receiving huge praise for the announcements he made during his company’s New Year’s party for staff members. Hard to believe? Perhaps, but it is entirely true, since the country in question is Greece, one of the countries hardest hit by the economic crisis and living on huge sums on loan from foreign lenders and the firm in question is the Karelia Tobacco company, one of the most historic cigarettes manufacturers in Europe, which continues to produce popular brands, such as Karelia, Karelia Slims and American Legend.
Mr Andreas Karelias, the company’s CEO announced that despite the added difficulties and the new problems and challenges that it had to face, the company has managed to turn the past year 2014 into the year with the biggest profit making in its long history. Wanting to express his gratitude and appreciation to its employees, the company has thus decided to offer them salary increases and other additional benefits for a total amount of more than €2.850.000, which is the largest amount that the company was ever returned back to its staff, as part of its profits. What is more interesting is that all the sums to be received by the employees will be net sums, with the company covering all associated taxes and fees.
So, because this is an optimistic story with a positive spin for the tobacco industry which is often criticized by the media, let us have a closer look at what the people working for Karelia will receive:
- Each employee will receive € 200 as a special festive season bonus, called the “Turkey benefit” (although such a sum suffices to cover most expenses of a festive meal and not just the poultry to be served!)
- All employees who have not missed even one working day during the year, are entitled to an “attendance benefit” of € 800.
- Each employee whose children are students in a state university will get a bonus of € 1.300, while those whose children passed the university entrance exams during 2014 will get € 500 extra. Moreover, the company will give each child who has managed to enter university a new Apple laptop.
- Employees earning more than 2.001 euro per month will receive an extra, one-off bonus of € 700.Those, whose salary ranges between 1.701 and 2.000 euro will get € 750. For those earning between 1.401 and 1.700 euro will receive an additional € 1.400. The extra bonus will be € 1.450 for those earning between 1.201 and 1.400 euro per month, while it rises to € 2.200 for those employees whose monthly salary ranges between 1.001 and 1.200 euro. Finally, the employees earning less than 1.000 euro per month will get a bonus of €2.400.
- Moreover, employees who have more than 3 under-age children and who earn between 1.201 and 1.700 euro will get an additional € 750. While those who earn less than 1.200 euro per month and have more than 2 under-age children will be getting an extra €450 for each child.
- The prize for each winning ticket in the New Year’s Party raffle will be €800.
- Finally, as of 1st January 2015, all employees earning a gross salary less than €2.800 per month will get a pay rise of €100 per month.
What makes all these provisions more remarkable is that the company has managed to generate big profits despite the fall in the volumes of its sales. Explaining this paradox, Mr Karelias mentioned that it was possible due to a number of reasons, including:
- Sales were up in the company’s more profitable brands and fell more in the company’s less profitable ones.
- There was an increase in the productivity and output of the manufacturing plant and a parallel restrain in expenses.
- Renegotiating the price of raw materials has resulted in impressive cost savings, while a stronger USD to EUR exchange rate has benefitted the company which took advantage of the favourable exchange rates.
- Following a prudent pricing policy adjusted to the financial conditions prevailing in the smoking public in the country, and also making improvements in the quality characteristics of its tobacco products rendering them more appealing as “value for money” choices in the eyes of consumers, has meant that the company has increased its market segment in its homeland, the Greek market, despite the overall shrinking of the market itself. This was especially evident not only in the sales of cigarettes, but in the sales of rolling tobacco as well.
- The greatest fall in foreign sales came from the North African countries, especially due to counterfeit products. However, measures were taken in order to further safeguard the company’s brands and make counterfeiting them more difficult, especially in terms of their packaging.
- In the EU countries, except Spain, sales volumes were positive while in the Balkan countries the company recorded significant successes despite the intense competition, still holding the number one position of foreign tobacco companies in the Bulgarian market, with impressive sales volumes in rolling tobacco. Moreover, increased sales and profits were also achieved in the Serbian, Montenegro and Croatian markets, as well as in the Duty free markets of Turkey and the Middle East.