China Kangtai Cactus agrees five-year deal to produce cactus cigarettes
2009-10-07
by Proactive Investors
China Kangtai Cactus Biotech Inc. (OTC: CKGT) announced that they have signed a five year co-operative production agreement with Jiangsu Nanhuanghai Industry & Commerce Ltd to produce cactus-based cigarettes.
Kangtai is a Chinese based agricultural and processing company, Kantai grows and manufactures of a variety of cactus-based products in China. Their cactus-derived products include nutritious food, a wide variety of beverages, extracts and powders and animal feed.
The newly patented cactus cigarettes are expected to increase sales by approximately $220,000 in the fourth quarter. Under the agreement, China Kangtai will provide its patented technology, raw materials, quality control guidelines and technical support. In return Jiangsu Nanhuanghai will provide processing facilities and production labor. The deal will operate on a fee based system whereby Kantai will pay production fees to Nanhaunghai.
The deal encompasses two varieties of Kantai’s patented cactus cigarettes the low nicotine cactus cigarette contains a small amount of tobacco among its blend of cactus, honeysuckle and ginkgo biloba leaves. This cactus-derived cigarette lowers tar and nicotine content by 70%. Whereas the zero nicotine cigarette is made without any tobacco, according to Kangtai Biotech It offers ‘taste and enjoyment’ that is equivalent to regular cigarettes.
China Kangtai CEO Jinjiang Wang commented on the potential market for the cactus cigarette market, while emphasising the deals ability to ‘fast track’ their products development;
"China has about 390 million smokers, accounting for 30% of global smokers. Our cactus health-preserving cigarette market represents a huge growth opportunity in China. Our strategic alliance with a cooperative cigarette manufacturer enables us to fill orders quickly with short production runs”
China Kangtai Biotech controls over 387 acres of plants and maintains an active R&D group that holds 18 product patents and is seeking another 12. China Kangtai's high-quality "green" products are sold throughout China via a distribution network that covers 12 of China's 23 provinces and two of China's four municipalities.
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