Mastermind Tobacco Kenya

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Mastermind Tobacco Kenya (MTK) is a tobacco company based in Nairobi, Kenya, established in the late 1980s. In 2020, it operated subsidiaries in Uganda, Tanzania, Malawi and Zambia, companies in its Continental group.1  Its website stated that it also had a presence in Democratic Republic of Congo (DRC), Somalia and South Sudan

According to market research company, Euromonitor International, MTK “focuses on marketing to rural and peri-urban consumers for its mid-priced and economy brands.”2 Mastermind’s most popular brands include Rocket, Ralli and its flagship brand, Supermatch.3

A “Threat” to British American Tobacco

MTK was established by ex‐British American Tobacco (BAT) Kenya Director Wilfred Murungi, and incorporated in 1987.4 Murungi, owner and Chairman of MTK, died in 2020 (see below).

The company has a history of receiving strong support from powerful politicians. As one academic paper noted in 2007:

“Mastermind Tobacco Kenya is…financed by Baganza, the ousted President of Burundi… it also appears to have a godfather in the person of Nicholas Biwott, who is a front man for President Moi’s commercial interests.”5

Because of its political support and insight into BAT’s business, MTK was first identified by BAT as being a “threat” to its business in 1987.5 See The BAT Files  for more on BAT’s influence in Africa.

Second Largest Tobacco Company in Kenya

Whist the tobacco market in Kenya was initially dominated almost entirely by British American Tobacco Kenya, the entry of MTK as a “local company”5 in the late 1980’s broke BAT’s monopoly.6

Market share

MTK’s presence in the market grew steadily thereafter. By 2002, MTK held 22% of the cigarette market share in Kenya, with BAT Kenya dropping from around 90% when MTK first entered the market7 down to 71% in 2002.5

MTK has the second largest share of the Kenyan cigarette market after BAT, by volume of sales. However, according to Euromonitor, since the early 2000s it has seen its percentage share decline, from over 20% to just over 16% in 2019.28 In 2019, it also held just over 14% of the cigarette market in Angola, and 1% in South Africa.

MTK (like BAT) produces most of its tobacco products in Kenya where leaf is purchased directly from contracted farmers.2 However, it also buys leaf from farmers in Uganda (which is processed in Kenya) and manufactures cigarettes under contract in factories in Malawi and Nigeria.1

Popular Brands

MTK focuses primarily on selling “affordable cigarettes” to Kenyans.2 Its prominent economy brand, Rocket, was described by Euromonitor analysts in 2013 as a “cash cow” because of its “affordability and popularity in rural areas.”2 Supermatch is its mid-priced, low-tar brand, and most of its market success in Kenya has been attributed to this brand.2

Market Expansion

In the early 1990s, MTK also quickly and successfully developed export markets for its tobacco products in South Africa as well as the Democratic Republic of Congo.6 MTK now bases it regional production in Kenya and exports all over East Africa.214

“Mistreatment” of Farmers

Farmers in Migori county produce most of the tobacco crop grown in Kenya and they are vulnerable to pressure from tobacco companies to sell their crops at low prices.9

There have been multiple accusations made against MTK for mistreatment of farmers in Migori:

  • In June 2014, MTK was not allowed to purchase tobacco from Migori County after farmers complained about the low purchase price MTK was offering them.2 Two months later, in August 2014, local media reported that hundreds of MTK’s contracted farmers in Migori protested, claiming that the company had reportedly failed to pay fees accrued over eight months that amounted to over 100 million Kenya Shillings (KSh).10
  • In 2016, MTK was accused of owing farmers KSh50 million.11 According to a report by The Nation, a MTK employee said that they were waiting for the money owed to come from their head office: “We are aware of their debts but let them remain calm. They will get paid ultimately”.11
  • In 2018, farmers were reported to be owed KSh100 million, and were again advised not to sell to MTK.12

The county government has attempted to promote alternatives to tobacco to farmers in Migori, including cattle and sugar cane.1314

A History of Policy Interference

MTK has made multiple attempts to weaken and delay the introduction of stronger tobacco control policy in Kenya.51516

The Tobacco Control Act 2007: MP Retreats and Legal Intimidation

Prior to the introduction of the Tobacco Control Act (TCA) in Kenya in 2007, the regional media reported that MTK, along with other tobacco companies, funded a retreat for over 40 Members of Parliament at an exclusive coastal resort where tobacco control legislation was said to have been discussed in detail.171819

In 2006, MTK succeeded, along with BAT Kenya, in challenging the TCA’s public smoking ban in Kenya’s High Court, and as a result the smoking ban was suspended20 on the basis that it was unconstitutional.2 Together, the tobacco companies challenged the authority of the Health Minister to impose the restrictions and claimed that the provisions did not allow them sufficient time to comply.21

Lobbied Against the Kenya Tobacco Control Regulations 2014

Following the implementation of the TCA after 13 years of industry interference,6 MTK also sought to weaken and delay the Kenya Tobacco Control Regulations (TCR). These regulations sought to strengthen the evidence-based framework of the TCA, bringing Kenya into compliance with the World Health Organization’s Framework Convention on Tobacco Control, tobacco control measures which, as a signatory, Kenya was legally obliged to implement.22

The company’s attempts to weaken the Regulations involved using what senior civil servants at the Ministry of Health described as “manipulative tactics”.22 MTK made multiple attempts to influence the development of the TCR, including concerted efforts to lobby policymakers15 and, on more than one occasion, MTK declared its objections to the TCR to government officials and policymakers.1623

Such strategies contravene Article 5.3 of the Framework Convention on Tobacco Control (FCTC), which seeks to protect policymaking from the vested interests of the tobacco industry.

Tax Dispute with Kenya Revenue Authority

MTK has been in a long-running dispute with the Kenya Revenue Authority (KRA).24

According to Business Daily Africa in early 2019, the KRA was aiming to recover Sh1.67 billion in excise duty and VAT (with an additional Sh815.5 million in interest and penalties) and Sh399.98 million of unpaid duty for a period  from October 2007 to June 2008 (plus interest of Sh42.29 million). The total claim against MTK was Sh2.93 billion (nearly GB£22 million) to be repaid in instalments.24

Reported to be in talks with PMI

In January 2019, Business Daily reported that MTK was in discussions with PMI over the potential sale of a majority stake in the Kenyan company, which would “see Mastermind upgrade its factory to start producing Philip Morris’ products such as Marlboro”.25 A few days later, the same newspaper reported that Mastermind had agreed to settle its dispute with the KRA, and that it would be forced to sell property assets to do so.26

Death of Wifred Murungi

Wilfred Murungi died in June 2019.2728 The financial status of the company, and succession plan, remained unclear. As of 15 December 2020, the MTK website did not list staff or board members.

Relevant Links

Mastermind Tobacco Kenya website

TobaccoTactics Resources

TCRG research

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to TCRG publications.

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References

  1. ↑abcMastermind Tobacco Kenya, Our Companies, website, undated, accessed December 2020 (age restriction applies)
  2. ↑abcdefghiEuromonitor International, Mastermind Tobacco (Kenya) Ltd in Tobacco (Kenya), August 2013 (paywall)
  3. ↑29Mastermind Tobacco Kenya, Our Brands, website, undated, accessed December 2020 (age restriction applies)
  4. ↑abMastermind Tobacco Kenya Ltd, Our History, website, undated, accessed December 2020
  5. ↑abcdeP. Patel, C. Collin, A.B. Gilmore “The law was actually drafted by us but the Government is to be congratulated on its wise actions”: British American Tobacco and public policy in Kenya, Tobacco Control 2007,16(1), doi:10.1136/tc.2006.016071
  6. ↑abcMinistry of Public Health and Sanitation, International Institute for Legislative Affairs, Centre for Tobacco Control in Africa, Tobacco Industry Interference in Kenya: Exposing the tactics, January 2013, available from ilyakenya.org
  7. ↑A. Oluwafemi, Regional summary for the African region. In: O. Shafey, S. Dolwick, G.E. Gunidon, eds. Tobacco control country profiles.2nd edn. Atlanta, GA: American Cancer Society, 2003
  8. ↑Euromonitor International, Mastermind Tobacco (Kenya) Ltd, company shares by volume, in Tobacco, 2014-2019 (paywall)
  9. ↑P. Magati, Q. Li, J. Drope, R. Lencucha, R. Labonté,The Economics of Tobacco Farming in Kenya, 2016, International Institute for Legislative Affairs and American Cancer Society, accessed December 2020
  10. ↑O. Omondi, Tobacco farmers stage demo over unpaid dues, News 24 Kenya, 18 August 2014, archived February 2016, accessed December 2020
  11. ↑abE. Otieno, Tobacco farmers in Migori demand Sh50m dues from cigarette company, The Nation, 4 October 2016, updated 29 June 2020, accessed December 2020
  12. ↑M. Odeny, Ignore Mastermind Tobacco, farmers told, The Star, 22 February 2018, accessed December 2020
  13. ↑K. Adinasi, Bleak future for tobacco farming in Migori, Kenya, The Standard, available from ilakenya.org, 26 August 2015, accessed December 2020
  14. ↑Migori threatens to kick out tobacco firms for failing to pay farmers, Kenya24news.com, 25 February 2018, accessed December 2020
  15. ↑abEW. Murungi, MTK, Letter to the Clerk of the National Assembly, Request for a meeting with Parliamentary Committees on Delegated Legislation, Finance and Health, 10 December 2014
  16. ↑abRM. Mutuma, Company Secretary MTK, Letter to Tobacco Control Board, MTK’s position on the proposed Tobacco Control Regulations 2014, 9 April 2015
  17. ↑Tobacco industry calls another MPs’ retreat, The East African Standard, 19 November 2004, accessed July 2015
  18. ↑D. Simpson, Kenya beach party ‘helps’ tobacco bill, Tobacco Control, 14(1):4, February 2005
  19. ↑Action on Smoking and Health, BAT’s Africa Footprint, April 2008
  20. ↑J. Tumwine, Implementation of the Framework Convention on Tobacco Control in Africa: Current Status of Legislation, Int J Environ Res Public Health, 2011 Nov; 8(11): 4312–4331 accessed November 2015
  21. ↑BBC, Kenya Suspends Smoking Ban, 31 May 2006, accessed November 2015
  22. ↑abRR. Jackson, Tobacco industry accused of ‘intimidation and interference’ in Kenya, The Guardian, 2 March 2015, accessed April 2015
  23. ↑BAT MTK, AOTK, KETOFA, Letter to the Tobacco Control Board, WTO TBT concerns the tobacco industry has with FCTC developments, 3 November 2011
  24. ↑abG. Fayo, Mastermind land on sale in Sh2.9bn deal with KRA, Business Daily, 28 February 2019, accessed December 2010
  25. ↑V. Juma, Mastermind billionaire in buyout talks with US firm, Business Daily, 25 January 2019, accessed December 2020
  26. ↑G. Fayo, Mastermind land on sale in Sh2.9 deal with KRA, Business Daily, 28 February 2019, accessed September 2019
  27. ↑J. Ogila, Mastermind Tobacco Chairman Wilfred Murungi is dead, The Standard, 6 June 2019, accessed December 2020
  28. ↑J. Kamau, Ode to tycoon who almost smoked BAT out of business, Daily Nation, 9 June 2019, accessed September 2019

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