BRITISH AMERICAN TOBACCO: 120 Years at the Top of the Tobacco Tree

Founded in 1902, the BAT Group today is a truly global company employing more than 53,000 people worldwide, with operations in over 180 markets and factories in more than 40 countries. “We’ve been around a long time, and have evolved into one of the world’s leading consumer goods companies,” BAT opens of 120 years at the forefront of the industry, “proud of our history and excited about the opportunity to write a new chapter in our success story.”

The Group’s global business is divided into four regions and covers over 150 million consumers and 11 million retail points of sale, offering a balanced presence in both high-growth emerging and developed markets. BAT is made up of more than 53,000 individuals across the world, based in offices, factories, tech hubs and R&D centres but also at grass roots – on the road helping and advising tobacco farmers and the retailers who sell the finished products.

“Both are valued partners who have always played a major part in our success,” BAT states. “We pride ourselves on the strength of our relationships with farmers, suppliers and retailers – crucial business partners who are vital to the sustainability of our company.

“Our operations span the globe; we are a leading FTSE company with truly international credentials.”

BETTER TOMORROW

As the only large-scale tobacco manufacturer producing locally in South Africa BAT buys 90% of locally grown tobacco leaf, which supports 200 commercial tobacco farmers, 150 emerging farmers and facilitates some 10,000 agricultural jobs. “We are a BBEEE level 4 company,” BAT elaborates, “employing more than 1100 people directly and goods and purchasing goods and services worth R6 billion from local suppliers, certified in 2020 as a Proudly South African company.

“We have a strong heritage of more than 100 years in South Africa, and are the country’s leading tobacco manufacturer by market share.

“BAT is the only remaining large-scale local tobacco manufacturer in the country, and also the sole tobacco manufacturer that is fully integrated into the tobacco value chain.”

BAT’s Heidelberg factory is the eighth largest in BAT’s global armoury, and accounts for a significant total production for both domestic consumption and export into the wider Southern African Region. From the outset it was ahead of its time, and remains the largest employer in the Heidelberg area boasting the capacity to produce more than 27 billion cigarettes a year for local and export markets.

“British American Tobacco South Africa is a significant player in the global BAT group, with a proud local heritage,” summarises André Joubert ESA Area Director, “committed to the future of this country and protecting local tobacco production and the 125,000 jobs sustained by our operations.”

A long, proud and distinguished history is evident, certainly, but BAT’s enduring success and accompanying diversified portfolio has always lain in and reflected its commitment to meeting the evolving and varied needs of the contemporary adult consumer. In March 2020 Chief Executive Jack Bowles laid bare BAT’s evolved strategy, at the heart of which was the vision to ‘Build A Better Tomorrow’, by reducing the health impact of the business through a greater choice of enjoyable and less risky products for consumers. 

“Our A Better Tomorrow purpose drives a reduction in the health impact of our business, and is based on three core beliefs,” BAT details. “Rigorous science should underpin our portfolio of reduced-risk products, product innovation is essential to satisfy evolving global consumer needs and sustainability is at the centre of our business decisions and heart of our strategy.”

FASTER TRANSFORMATION

Along its six celebrated cigarette brands Dunhill, Peter Stuyvesant, Rothmans, Pall Mall, Benson & Hedges, and Kent, BAT South Africa’s portfolio today comprises a range of scientifically tested, reduced risk vapour products, and modern oral products, under its own brands Vuse and VELO respectively. Free of tobacco, VELO is a global brand available in more than 14 countries and now in South Africa, while Vuse is one of the world’s leading vapour brands and the first carbon neutral vape brand globally.

“BAT South Africa’s diversified portfolio reflects our commitment to meeting the evolving and varied needs of today’s adult consumer,” the company asserts. “Adult nicotine consumers drive everything we do at BAT South Africa, and we invest effort and care in understanding their preferences. We believe that adult consumers should make informed choices about their brand and product preferences, and we aim to meet the evolving and varied needs of today’s consumers who seek sensorial enjoyment for different moods and moments.”

With the spirit of evolution and choice such prominent elements of this prolific company, it is only befitting that 2022’s half-year results evidence the primordial importance of New Categories, whose overall revenue boomed 45% to reach £1,283m. Vapour revenue was up 48% and Vuse extended its global category value share leadership, becoming top in the U.S, and Modern Oral revenue also climbed by 37%, driven by Velo and its continued volume share leadership in Europe.

“I am very proud that our continued New Categories growth momentum is driving Faster Transformation,” Bowles reiterated. “We are delivering both strong operational performance and transforming the business. Our A Better Tomorrow purpose, partnered with our well-established multi-category strategy, continues to drive growth. We are confident in delivering £5bn New Category revenue, and profitability, by 2025.”

Also central to BAT’s strategy is the transition from being a business where sustainability has always been important, to one where it is front and centre in everything that it does. “Specifically, we are clear that reducing the health impact of our business is our principal focus area, as well as placing a greater emphasis on the importance of addressing climate change and excellence in environmental management,” BAT furthers, and now an aggressive, targeted Low-Carbon Transition Plan has set out the specifics of aligning its business model with a thriving economy that works for people and the planet in the long term.

“We’re proud to take this latest step in our sustainability journey,” beamed Kingsley Wheaton, BAT’s Chief Growth Officer. “By outlining the measures we will take to live up to our Net Zero targets through our Low-Carbon Transition Plan, we’re demonstrating our continuing commitment to building A Better Tomorrow. As a global company, we know minimising impacts across our value chain is the right thing to do, as well as making sound business sense. That is why we have set stretching science-based climate-related targets and continue to embed sustainability across our business.”