King-Sized Deal

The tobacco empire of South African Anton Rupert manufactures and sells one out of every 15 cigarettes in the world. His brands include Rothmans in Canada and Dunhill in Britain, as well as the lesser-known Edgeworth cigarettes and pipe tobacco in the U.S. Yet until now his realm was more of a loose association of fiefdoms than an empire. All of his companies were managed and a controlling interest was owned by nationals of the 23 countries where they were located. As a result, the Rupert group does not appear in FORTUNE'S list of the 200 largest corporations outside the U.S.

It soon will. Rupert has just set up a holding company and bought control of all his nine tobacco firms in Europe and Australasia for $345 million in securities. The new company, Rothmans International, is the world's fifth largest tobacco company and has assets of $539 million and annual sales of nearly $2 billion (Rupert companies in South Africa and North and South America, not yet consolidated, ring up another $ 1 billion in sales yearly). The main advantage of the new arrangement is that Rupert can now promote and sell his many brands of smokes through a unified distribution network.

Now 55, Rupert started out as a university chemistry lecturer and got into the tobacco field out of a vague desire to "manufacture something." In 1942, with only $30, he opened a tiny tobacco shop in Johannesburg. After World War II he borrowed enough from friends and banks to buy an unused flour mill and two cigarette-making machines. Soon he was nearly broke. Rupert staved off disaster in 1948 by persuading London's Rothman of Pall Mall to allow him to make and market its brands (Pall Mall, Consulate) in South Africa. Five years later he bought out Rothman for about $2,000,000. Since then he has ventured beyond tobacco road. He now produces some of South Africa's finest wines and brandies and has interests in 23 breweries in five countries, including Canada's Carling.

It was primarily research that turned Rupert's fledgling business into an empire. While puttering in his factory laboratory in 1952, he devised what he claims was the world's first king-sized filter-tip cigarette, Rembrandt, which was an immediate success. Since then, Rupert claims his company was first to come out with menthol-filtered and multifiltered cigarettes.

Because he believes that "nobody can trade with paupers," Rupert has always insisted that his companies give a percentage of their profits to the countries in which they operate. The percentage varies, but in South Africa the company donates about $1,000,000 a year to universities, sports and art foundations. Rupert has become a benevolent partner to his country's black majority. As far back as 1963, his South African plants pioneered a $6-a-day minimum wage, more than many South African blacks earn even now. Last week Rupert completed organization of a bank to finance development in black areas of South Africa and in the black nations to the north. Since 1966, he has been industrial adviser to Lesotho, a black kingdom entirely surrounded by South Africa, and he has assigned some of his top executives to oversee development programs there.

Rather than identify himself politically with fellow Afrikaners, Rupert, whose ancestors came in from The Netherlands as early as 1662, calls himself a "pale-skinned African." He believes that South Africa's racially oppressive apartheid laws are "not all a practical policy at the moment" but remains as soft-spoken in political circles as he is in private conversation: he prefers to promote his philosophy by example rather than by evangelizing.

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