BAT SA – Total Tobacco Transformation

British American Tobacco (BAT) is a leading global company with an enviable heritage in tobacco, boasting nearly 120 years at the forefront of the industry. “We’ve been around a long time, and have evolved into one of the world’s leading consumer goods companies,” BAT begins, “proud of our history and excited about the opportunity to write a new chapter in our success story.”

BAT is made up of 55,000 individuals across the world, based in offices and factories but also on the ground floor, on the road helping and advising tobacco farmers and the retailers who sell the finished products. “We pride ourselves on the strength of our relationships with farmers, suppliers and retailers – crucial business partners who are vital to our success and the sustainability of our company,” BAT says of its holistic approach to business.

“Our portfolio reflects our commitment to meeting the preferences of today’s adult smokers while transforming tobacco with a choice of potentially reduced-risk products. We sell our brands in more than 200 markets worldwide and in 2018 we were market leaders in more than 50 of them.”

BAT IN SA

It is this sustainability and commitment to perfecting the entire process which has allowed BAT to grow into a business with a presence which spans the continents, while remaining hugely valued for its contribution to local economies. “We are a truly international company,” BAT goes on. “Our products are sold in over 200 markets with a balanced presence in high-growth emerging markets and highly profitable developed markets.”

The tobacco manufacturing industry in South Africa is estimated to be worth close to R30bn, and propped up by nearly eight million adult tobacco users. It is home to one of BAT’s longest and most distinguished histories, and British American Tobacco South Africa is now the second largest company listed on the JSE by market capitalisation, and the leading tobacco manufacturer in South Africa by market share. “We have a strong heritage of more than 100 years in South Africa,” the company delineates.

Coming from a long legacy in South Africa as United Tobacco Company, the global merger of Rothmans International with British American Tobacco in 1999 created the business as it stands today, and ultimately led to the creation of British American Tobacco South Africa. To reach its dominant position in Southern Africa and beyond BAT has had to balance a global remit against retaining local relevance.

BAT’s operations cover every aspect of the tobacco product cycle – everything from growing the tobacco, through to manufacture, marketing and distribution. Three manufacturing facilities, including the Heidelberg which ranks as one of the largest in the world, facilitate the company’s regional production requirement, including exports to countries throughout Africa and the Middle East.

Multiple distribution networks create a supply chain which services South Africa, Angola, Zambia, Botswana and Zimbabwe, to name but a few.

British American Tobacco South Africa’s approach to sustainability is underpinned by the concept of ‘Shared Value’, a belief in investing in the country’s future, for the benefit of both society and the business. “Environmental management is a key focus for us given that the most important input into our products is sourced from nature,” the South African arm explains. “Because of this, we recognise the importance of applying sound environmental practices throughout our business.”

It is a sentiment we hear echoed continually from manufacturing giants, but BAT SA lives its commitment to the conservation of the physical environment and the sustainability of the country’s natural resources, and works actively to reduce its impact.

“We have reduced our energy consumption by installing natural and LED lighting, motion sensors, motor re-sizing, variable speed drives, and solar panels, among others,” the company details of recent suitability initiatives. “This has helped the company optimise our energy consumption by more than 40% over the past five years.”

Water saving initiatives, notably at the Heidelberg factory, have allowed BAT SA to recycle a significant amount of water, as well as harvest rainfall. “We are very proud of our project which was primarily initiated to conserve water, and answering the call from government to partner and find a solution to water shortages,” BATSA CEO Soraya Benchikh said of the achievement.

“It has benefitted the business, but as a corporate citizen of this country, we’re also very conscious of giving back to the society we operate in.”

TRANSFORMING TOBACCO

British American Tobacco South Africa’s portfolio of more than 20 brands includes some of the continent’s most well-known and top-selling cigarette brands. These range from Dunhill, which has been around almost as long as BAT itself and whose cigarettes are sold in 120 countries, to the relative newcomer Kent, launched in the South African market in November 2006.

With a heritage and the foundations of its success firmly in cigarettes, BAT puts its success down in large part to an ability to adapt and change to the prevalent market desires and moods. “We believe our company has more than stood the test of time because we’ve always excelled at anticipating and meeting the preferences of our consumers, adult smokers,” it explains.

Consumer needs are, famously, ever-shifting – it has been one of BAT’s key skills to identify and shape these throughout its lifetime. Today, the serious risks associated with smoking are more prevalent than ever before, and leading many consumers to have expectations beyond cigarettes, to seek new products that provide the pleasure of smoking and consuming nicotine, but with reduced risks.

“We see this as an opportunity,” BAT declares. “Despite being aware of the risks, hundreds of millions of people worldwide enjoy smoking and we will continue to provide them with high-quality products, marketed responsibly.

“However, our world is changing. Now, many of our consumers have expectations beyond cigarettes and they are seeking new products that provide the pleasure of smoking and consuming nicotine, but with reduced risks.”  This has spawned an initiative BAT calls ‘Transforming Tobacco’, a journey which has been several years in the developing. “Our company is also transforming,” Bat goes on. “We have become a multi-category tobacco and nicotine products business with potentially reduced-risk products embedded into the heart of our company, alongside our cigarette operations.”

This year is a crucial one in this commitment, as it sees three global new category brands poised to further accelerate BAT’s growth and diversification” VUSE for vapour products; VELO for modern oral products and glo for tobacco heating products. This announcement marks the beginning of an ambitious brand migration and consolidation programme worldwide towards these three priority brands.

“We understand global brands are important for our worldwide consumers – brands that they can trust, recognise and buy wherever they are in the world,” said Kingsley Wheaton, British American Tobacco’s Chief Marketing Officer. “For these new consumer categories, both quality and trust are vital and this step further supports BAT’s leading ambition in the industry.

“We are at a very exciting stage of our New Category journey,” Wheaton concluded. “Central to our leading role is continuing to develop remarkable products and trusted brands, whilst driving global awareness of them. The move to VUSE, VELO and glo is yet another exciting milestone in our New Category journey. We remain committed to accelerating the transformation of our industry and the growth of our brands.”