Tag: British American Tobacco

  • BAT to Resume Legal Action Against South Africa’s Tobacco Ban

    BAT to Resume Legal Action Against South Africa’s Tobacco Ban

    Photo: Sang Hyun Cho from Pixabay

    British American Tobacco South Africa (BATSA) will resume legal action against the country’s government’s decision to extend the ban on tobacco sales during Level 3 of the nationwide lockdown, reports Polity.

    “BATSA has made every effort to constructively engage with the government since the ban came into force, including making detailed submissions, along with other interested parties, to various ministers, as well as directly to the presidency,” the company said in a statement.

    “To date, no formal response has been received from the government, and BATSA has also not been included in any of the government’s consultation processes so far.”

    The Fair Trade Independent Tobacco Association has already taken the government to court to challenge the ban in a separate case.

    Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma, argued that, while Covid-19 is a relatively new disease, early studies support the view that using tobacco products increases not only the risk of catching the disease but also the risk of contracting a more serious form of the disease.

    “This, in turn, increases strain on the public health system, by increasing the number of people who will need access to resources such as intensive care unit beds and ventilators,” she said. 

    BAT said the ban threatens the survival of South Africa’s legal tobacco sector, which employs thousands.

  • Covid-19 Vaccine Ready for Human Trials, Says BAT

    Covid-19 Vaccine Ready for Human Trials, Says BAT

    Photo: Pete Linforth | PixaBay

    British American Tobacco (BAT) said on Friday it is ready to test its potential Covid-19 vaccine using proteins from tobacco leaves on humans, after it generated a positive immune response in pre-clinical trials, reports Reuters.

    Once it gets approval from the U.S. Food and Drug administration (FDA) for the vaccine, the company plans to start testing on humans.

    In April BAT announced it was developing a Covid-19 vaccine from tobacco leaves and could produce 1 million to 3 million doses per week if it got the support of government agencies and the right manufacturers.

    Multiple companies from a variety of sectors have been racing to develop a vaccine for Covid-19, with some of the vaccines already in human trials. Experts have suggested that a Covid-19 vaccine could take 12-18 months to develop.

    On Friday, BAT said it had submitted a pre-investigative new drug application to the FDA and that the agency had acknowledged the submission. BAT said it was also talking with other government agencies around the world about the vaccine.

    The company said it has committed funds to conduct clinical trials, which it expects to start as early as late June. BAT has reportedly also invested in additional equipment to boost capacity.

  • Beyond Tobacco

    Beyond Tobacco

    Photos: BAT

    British American Tobacco prepares for a radically different future.  

    By Stefanie Rossel

    Less than a year after taking over as British American Tobacco’s (BAT) new CEO, Jack Bowles has already left a distinctive mark on the company. In September, the maker of Lucky Strike and Camel cigarettes unveiled a comprehensive restructuring program that included the layoff of 2,300 of its 55,000 employees. A fifth of the job cuts were senior roles. Savings delivered by the measure were to be reinvested in the company’s new categories, such as vapor, tobacco-heating products and oral tobacco, BAT said. The goal is to make BAT a more efficient and agile company and to facilitate business processes.

    On the occasion of its capital markets update in mid-March, the company appeared to have reinvented itself: Gone was the tobacco leaf in its logo, replaced by a double swoosh and accompanied by the slogan, “A better tomorrow.” BAT appears to be redefining itself as a consumer goods company.

    “Our strategy puts the consumer first, focusing on understanding adult consumer choice and enjoyment,” explained Kingsley Wheaton, BAT’s chief marketing officer. “We will capture lost consumer moments with a portfolio in tobacco, nicotine and beyond. This will enable sustainable, long-term growth with a clear focus on foresights, innovation, brands, activation, teams and technology. We will become a business that defines itself not by the products it sells but by the consumer needs it meets.”

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    “The redesigned logo, replacing one that hadn’t altered since the late 1990s, helps to emphasize that an increasing part of BAT’s future is likely to be in noncombustible nicotine products such as smokeless tobacco, vapes and tobacco-heating [products],” says Jonathan Fell, principal at Ash Park. “With ‘beyond nicotine,’ it is also raising the prospect of going into areas such as caffeine or cannabidiol/tetrahydrocannabinol products once the appropriate legal and regulatory framework is in place and the company’s scientists have fully substantiated their safety and efficacy.”

    BAT experienced a 4.7 percent reduction in traditional cigarette volume in 2019, according to its most recent annual report. The company’s revenue growth of 5.7 percent to £25.88 billion ($32.26 billion) in 2019 was driven by pricing across the cigarette portfolio and an increase in revenue from traditional oral tobacco and next-generation products (NGPs).

    In light of continuously declining global cigarette sales, tobacco companies have increasingly felt the pressure to adapt their business models to the changing environment. Philip Morris and Japan Tobacco International announced similar restructuring and rationalizing measures in the last quarter of 2019.

    Jack Bowles aims to make BAT a more efficient and agile company

    Faster and more responsive

    Upon taking the helm at BAT, Bowles set out three priorities: driving value from combustibles, improving the performance of new categories and simplifying the business. During the capital markets event, Bowles substantiated forthcoming goals. BAT aims to reduce the health impact of its business by offering a greater choice of better and less risky products with the ambition to have 50 million noncombustible product consumers by 2030. By extending its Quantum project, a business simplification program initiated in 2004, the company aims to generate £1 billion over the next three years—money it intends to utilize to accelerate the revenue growth of its “new category” (NC) business. Next to vapor products, NC includes heated-tobacco products (HTPs) and modern oral products, a category comprising white, tobacco-free nicotine pouches, such as Epok, Lyft and Velo. The company will support its strategy by establishing innovation hubs in London, San Francisco, Shenzhen and Tel Aviv in addition to its R&D centers in Winston-Salem, North Carolina, USA, and Southampton, U.K.

    While acknowledging that the coronavirus crisis was likely to make NC growth in the first half of 2020 difficult with the company having postponed product launches, Bowles nevertheless expected to make further progress this year toward BAT’s aim to produce revenues of £5 billion through novel products by 2023–2024.

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    Consolidating brand properties

    In 2019, BAT increased its NC revenue to £1.3 billion, which represents 37 percent growth compared to the previous year and more than double the revenue from two years ago. BAT sold 226 billion vapor units and 9 billion HTP units in 2019, up 19 percent and 32 percent, respectively, over the previous year. With a plus of 188 percent, modern oral products saw extraordinary growth. The company sold 1,194 million pouches in 2019.

    In November, BAT began to streamline its NGP portfolio to further accelerate the growth of its NC business, thereby creating three global brands. Vapor products will be branded as Vuse and HTPs will continue to be branded as Glo whereas modern oral products will be marketed under the Velo brand. The brand consolidation, taking place in phases, is set to be completed by the end of 2020.

    BAT’s flagship Vype brand will also be migrated to Vuse, currently a brand manufactured by R.J. Reynolds Vapor Co., a subsidiary of Reynolds American Inc. (RAI), which BAT acquired in 2017. Launched in 2013, Vuse once was the U.S.’ most popular e-cigarette, reaching a market share of 33 percent in 2015 before Juul overtook it in 2017. In 2019, Vuse recovered some of the lost territory, claiming a market share of 14 percent. Growth was driven by the launch of Vuse Alto, a pod-mod type vaporizer. In October 2019, RAI submitted a premarket tobacco product application (PMTA) to the U.S. Food and Drug Administration (FDA) seeking market authorization for a range of Vuse flavors. At the time of writing, the FDA’s court-ordered May 12 PMTA deadline was likely to be extended by 120 days because of the coronavirus pandemic.

    Fell is confident that BAT will be able to pursue its growth strategy in the U.S. despite the nationwide restrictions on e-cigarette flavors that took effect in February. The ban applies to mint and fruit flavors that are offered in cartridge-based e-cigarettes, such as the pods sold by Juul Labs. Menthol and tobacco flavors continue to be allowed as well as fruit flavors delivered by disposable vapes, vapor devices with an open-tank system and their respective e-liquids. “BAT has been gaining share of the U.S. vaping market, helped by the success of its Vuse Alto device and also because, relative to major competitors, a smaller proportion of its portfolio has been hit by the flavor ban,” says Fell. “In the short term, the growth of the overall vaping category could be impacted by the challenges and ongoing uncertainty posed by the May 2020 PMTA deadline, which may now be extended due to the Covid-19 outbreak. But in the long term, BAT should be in a very strong position to compete energetically in the U.S. vape market and certainly has the resources to meet the increasing regulatory demands.”

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    Jonathan Fell

    Pushing forward

    BAT’s Glo has been sold in Japan and South Korea—the world’s leading HTP markets—along with Eastern Europe, Russia and Canada, among other markets. To support the expansion of Glo across Europe, the company in 2018 started a €800 million ($875 million) five-year investment program in its Romanian factory.

    With around 70 percent of global industry volume, Japan is by far the largest market for HTPs. The segment in that country is currently led by Philip Morris International (PMI), which debuted the category in 2014 with the launch of IQOS and holds a 71.8 percent share. BAT launched Glo in Japan in 2016, and the product held a 20.1 percent category share in 2018, according to Reuters. To narrow the gap with IQOS, BAT in 2019 launched three new Glo variants in Japan: Sens, Pro and Nano. A fourth version was supposed to be introduced around press time.

    “I think we will see increased efforts in this category, starting with the launch of Glo Hyper—with larger tobacco sticks and a device which uses induction heating—in April,” says Fell. “Rather than stressing it wants to be a leader in HTP specifically, BAT is very committed to its multi-category approach,” he adds. “It is well ahead of PMI in vaping and smokeless and will offer a choice of modern oral tobacco, vapes or tobacco-heating [products] that [are] relevant to consumer needs in individual markets. Hence, BAT says it wants to go ‘from a distant number two to a very strong number two’ in HTP.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • BAT Resilient in Uncertain Times

    BAT Resilient in Uncertain Times

    Photo: British American Tobacco

    British American Tobacco (BAT) has achieved all its 2019 financial targets, according to a company press release.

    The company has consistently delivered on its high single-figure constant currency earnings growth target and continues to maintain this guidance for 2020, BAT wrote in its statement.

    The beginning of 2020 has seen continued volume and value share growth of 40 basis points and 20 basis points, respectively; positive volume growth; and strong price mix with pricing in line with the company’s plan.

    Despite the coronavirus outbreak, most BAT factories are open and operating at full capacity. The company has built up an average stock of about two months of finished goods with further stock throughout its wholesale and retail footprint. About 75 percent of BAT’s global revenue is in developed markets where distribution and availability are largely unchanged.

    In a small number of markets where mandated by governments, the company’s combustibles manufacturing facilities have faced limited periods of shutdown. To date, though, BAT has seen limited impact on consumer demand, pricing or consumers’ ability to access products. Sales in global travel retail have been significantly impacted, although this represents less than 1 percent of the company’s sales. Only a few governments have restricted the sale of cigarettes in their countries.

    BAT is anticipating a reduction in trade and consumer stocks and some effect on industry volume and revenue growth in the second quarter of 2020. This, together with some delayed launches in new categories, means results are expected to be weighted to the second half.

    The company expects constant currency adjusted revenue growth around the low end of the 3 percent to 5 percent range in fiscal 2020 and continued progress toward the company’s 2023–2024 ambition of £5 billion ($6.2 billion) in revenue in new categories.

  • Video: CEO on BAT results

    Video: CEO on BAT results

    Nicandro Durante comments on British American Tobacco’s 2016 performance. Video: 3B NEXUS

  • Factory closure threat

    Closed photo
    Photo by gagilas

    British American Tobacco has said that it might close its South African cigarette plant if plans to ban branded tobacco packaging are implemented, according to a story by Thembisile Dzonzi for Bloomberg News.

    BAT’s Heidelberg factory is situated south of Johannesburg.

    The proposed ban would threaten the financial viability of the Heidelberg operation, Joe Heshu, BAT’s head of external affairs in Southern Africa, said in an e-mailed response to questions from Bloomberg.

    Standardized packaging threatened the closure of the factory and posed a threat to the viability of the legal tobacco industry in South Africa, Heshu said.

    The move would make it harder to distinguish licit cigarettes from black-market cigarettes and “the illegal market will benefit from having a cheaper product,” he added.

    South Africa is cracking down on industries and products viewed as harmful to consumers, including through a planned tax on sugar-sweetened beverages, which Finance Minister Pravin Gordhan said last month would be implemented later this year.

    In his budget speech, Gordhan announced higher taxes on tobacco and alcohol products.

    The full story is at: https://www.bloomberg.com/news/articles/2017-03-01/bat-says-planned-south-african-tobacco-rules-may-close-plant.

  • BAT scientists propose new framework for assessing reduced-risk products

    Scientists at British American Tobacco (BAT) have proposed a new scientific framework that could be used to assess the reduced-risk potential of nicotine and tobacco products currently being developed.

    The new assessment framework employs a four-stage process that uses lab-based and clinical tests along with real-world observations of individual and population perception and use, according to BAT.

    “We propose that this assessment framework will help us build the required evidence base to demonstrate that novel tobacco and nicotine products can deliver a net population health gain in comparison to cigarette smoking,” Dr. James Murphy, head of reduced-risk substantiation at BAT told delegates at the Tobacco Science Research Conference (TSRC), in Naples, Florida, USA, in September.

    The first step in the process is the characterization of the product, which includes laboratory-based testing. This is followed by clinical testing to determine whether toxicant reductions measured in the laboratory are observed in consumers when the products are used. The third step is to determine what impact, if any, this reduction in toxicants will have on a person’s individual risk as well as the collective risk of the population using the products.

    According to BAT, in contrast to modified cigarettes, innovative new tobacco and nicotine products have significantly reduced toxicant levels.

    “We have observed reductions of 90 percent and more in the levels of certain toxicants present in these new tobacco and nicotine products and these are manifesting reductions when the aerosols are applied to in vitro tests, which can mimic some key disease processes and endpoints,” said Murphy. “These early-stage results demonstrate that in comparison to reduced toxicant prototype cigarettes, these new products have a greater potential to demonstrate disease relevant changes in humans—tests that we plan to do over the next 12-18 months.”

  • R.J. Reynolds signs vapor technology term sheet with BAT

    R.J. Reynolds Tobacco Co. (RJR) has signed a technology-sharing term sheet with British American Tobacco (BAT) that provides a framework for collaboration and mutual cross-licensing of vapor product technologies through 2022.

    The term sheet is the first step in reaching a definitive agreement under which RJR and BAT will collaborate to develop next-generation vapor products. Specifics of the agreement are still being negotiated by the companies, who have a goal of reaching a definitive contract by the end of the year. The collaboration will include a process for joint research and development activities, as well as cooperation on regulatory, scientific and manufacturing issues related to vapor products.

    “This proposed technology-sharing agreement makes great business sense as we lead the transformation of the tobacco industry, allowing us to continue to deliver innovative, high-quality vapor products to adult tobacco consumers seeking smoke-free alternatives,” said Debra Crew, R.J. Reynolds’ president and chief commercial officer.

  • Tobacco giants sue Britain over plain-packaging

    Philip Morris International (PMI) and British American Tobacco (BAT) have sued the British government over plain-packaging legislation passed in March. The law, which would take effect from May 2016, requires cigarettes to be sold in packages of uniform shape and size that feature only the brand name and contain prominent graphic health warnings. England is the third and most populous country to introduce plain-packaging laws, following Australia and Ireland.

    PMI argues that England’s plain-packaging regulations “unlawfully deprive PMI of its trademarks” and should therefore be overturned, according to an article in The New York Times. London-based BAT stated that the British government had left the company “with no other choice” and released a statement saying that “any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.” Japan Tobacco International has also indicated it would challenge England’s legislation. The tobacco companies are seeking unspecified damages, which could total billions of dollars if granted.

    A statement released by the English Department of Health said it would “not allow public health policy to be held to ransom by the tobacco industry” and that it “would not have gone ahead with standardized packaging unless we had considered it to be defensible in the courts.”

  • BAT sales up 5 pct, driven by global brands

    British American Tobacco reported revenue growth of 5 percent at constant rates of exchange in the first quarter ended March 31, adding that global drive brand cigarette volumes grew by 1 percent.

    The report stated:

    • Revenue growth of 1 percent at current rates of exchange.
    • Cigarette volumes from subsidiaries fell 3.7 percent to 160 billion, with a decrease of 3.4 percent for total tobacco volumes.
    • Board confident of another year of earnings growth in line with long term strategic goals.
    • Pricing environment remains strong despite difficult trading conditions in many parts of the world, notably southern Europe.
    • If current exchange rates persist for the rest of the year, the currency headwind that adversely impacted the quarter will reverse.
    • Group has sufficient financing and facilities available for the foreseeable future.
    • There have been no material events, transactions or changes in the financial position of the Group since the year end.
    • -Shares closed Wednesday at 3548 pence valuing the company at £68.25 billion.