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Tag: British American Tobacco

  • BAT Makes Board and Committee Changes

    BAT Makes Board and Committee Changes

    Photo: BAT

    Sue Farr and Dimitri Panayotopoulos will step down from BAT’s board at the end of the company’s annual general meeting on April 24, 2024, having served as nonexecutive directors for nine years.

    As a result of these departures, BAT is changing the role of senior independent director and the composition of the audit and remuneration committees.

    After the conclusion of the company’s annual general meeting, Holly Keller Koeppel will be appointed as senior independent director, succeeding Farr. Koeppel has been a nonexecutive director of the company since July 2017, and she is currently chair of the audit committee and a member of the nominations committee. Darrell Thomas will be appointed as chair of the audit committee, succeeding Koeppel, who will remain a member of the audit committee. Kandy Anand will be appointed as chair of the remuneration committee, succeeding Panayotopoulos.

    Luc Jobin said, “I would like to thank both Sue and Dimitri for their extensive contribution to the board over their tenures. I would also like to thank Holly for chairing the Audit Committee since 2019. I look forward to welcoming Holly, Darrell and Kandy to their new roles.”    

    The above proposals are subject to reelection of each of the directors at the 2024 annual general meeting.

  • BAT Nigeria Celebrates Factory Anniversary

    BAT Nigeria Celebrates Factory Anniversary

    From left to right: Chief Kola Karim, chairman of the BAT Nigeria (BATN) advisory board; Odiri Erewa-Meggison, director, external affairs for BAT’s West, and Central Africa business; and Yarub Al-Bahrani, managing director at BAT Nigeria and West and Central Africa. (Photo: BAT Nigeria)

    British American Tobacco Nigeria is celebrating the 20th anniversary of its Ibadan factory. Established in 2003, the Ibadan factory has been a cornerstone of BAT Nigeria’s operations in West and Central Africa, enabling exports to 11 countries in the West and Central Africa region, and recently exporting to the U.S. 

    “Two decades ago, we embarked on a journey to establish a world-class manufacturing facility in Nigeria, and today, we are proud to celebrate the Ibadan factory as a shining example of our commitment to excellence and sustainability in Nigeria,” said Yarub Al-Bahrani, managing director at BAT Nigeria and West and Central Africa.

    “The factory has played a pivotal role in our success, contributing significantly to the Nigerian economy, creating employment opportunities across the value chain, and promoting environmental stewardship”, he added.

    The Ibadan factory has implemented a comprehensive environmental management system, incorporating stringent measures to reduce its carbon footprint. According to BAT, these efforts have resulted in significant reductions in energy consumption, water usage and waste generation.

    On Feb. 6, Ibadan will unveil its 1.4MWP grid-tied solar panel system. Its advocacy for water stewardship has been recognized with various certifications, including the prestigious Alliance for Water Stewardship core certification.

    Speaking on the factory’s milestone, BAT’s director of external affairs for West and Central Africa, Odiri Erewa-Meggison, asserted that BAT Nigeria has remained steadfast in its commitment to driving ‘A Better Tomorrow,’ [the company’s corporate slogan] while prioritizing safety, sustainability and responsible business practices.

    “The Ibadan factory is not just a manufacturing facility; it is an integral part of the Nigerian community and we are continuously committed to making a positive impact on the lives of those around us,” she said.

    Erewa-Meggison stated that the anniversary celebration will serve as a tribute to the accomplishments and successes of the factory. “This is an opportunity to acknowledge the dedication and hard work of all employees, partners and stakeholders who have played a vital role in shaping our growth and journey,” she added. “We look forward to celebrating more milestones and positive contributions of the factory.”

  • PMI and BAT Settle Patent Disputes

    PMI and BAT Settle Patent Disputes

    Photo: ASDF

    Philip Morris International and British American Tobacco have settled their ongoing intellectual property disputes relating to heated tobacco and vapor products.

    The cigarette makers had been fighting a multi-front patent battle. BAT, which makes Vuse vapes and Glo heated tobacco devices, was ordered to pay PMI millions of dollars after losing one case, while PMI has been blocked from importing its flagship heated tobacco device IQOS into the United States as part of another.

    The settlement includes non-monetary provisions between PMI and BAT that resolve all ongoing global patent infringement litigation, encompassing all related injunctions and exclusion orders, and prevents future claims against current heated tobacco and vapor products. The settlement also allows each party to innovate and introduce product iterations.

    “We are pleased that this matter has been resolved to the mutual satisfaction of both parties,” said PMI CEO Jacek Olczak in a statement. “There is a clear and growing global desire from adults who smoke to choose from a range of smoke-free products, and we believe continued reduced-risk category innovation can accelerate declines in the harms associated with smoking to the benefit of consumers and public health at large as we continue PMI’s journey to end the sale of cigarettes.”

    “This agreement is an important step forward for BAT and all our stakeholders,” said BAT CEO Tadeu Marroco in a statement. “Having already built two £1 billion [$1.28 billion] brands in Vuse and Glo, the potential for their continued impact on tobacco harm reduction is clear. I am delighted that this settlement will allow BAT to focus on developing innovative solutions that provide adult consumers with a greater choice of reduced risk products in support of our ‘A Better Tomorrow’ purpose. By doing so, we will help build a smokeless world for the benefit of consumers, investors and society as a whole.”

  • Song Young-jae to Lead BAT Korea

    Song Young-jae to Lead BAT Korea

    British American Tobacco has appointed Song Young-jae as its new country manager in Korea, reports The Korea Herald.

    A marketing and finance expert, Song will be tasked with promoting BAT’s combustible products.

    “Song is an expert in the global tobacco industry and the right person to spearhead the company’s future innovation,” a company official was quoted as saying.

    A graduate from the London School of Economics and Political Science, Song started his career at the BAT headquarters in London in 2008. In 2010, Song moved to BAT’s Netherlands office, where he nurtured his specialty in marketing and finance.

    Following a first stint at BAT’s Korean unit between 2014 and 2020, Song was appointed general director of the BAT-Vinataba joint venture in Vietnam.

    “I feel heavy responsibility taking the country manager post at BAT Rothmans amid the rapidly changing market environment,” Song said. “I will introduce innovative and sustainable business strategies so that BAT Rothmans can lead the market in the future and solidify its status in the global tobacco industry.”

  • Glo Hyper Pro Launched

    Glo Hyper Pro Launched

    Image: BAT

    BAT has launched a new version of its Glo heating device. Glo is an alternative to smoking that doesn’t involve burning, producing fewer and lower levels of toxicants than conventional cigarettes.

    The Glo Hyper Pro device is lightweight, fits easily in consumers’ pockets and comes with improvements in performance, according to the company. With this new device, one charge takes approximately 90 minutes and lasts all day. Once charged, consumers can expect to use the device for 20 sessions in total.

    “We’re proud that today, over 8.8 million adult consumers now use Glo,” said Kingsley Wheaton, chief strategy and growth officer at BAT, in a statement. “This latest version is our most advanced yet, with a much improved user experience. We continue to listen to consumers and enhance our products so that they find Glo a satisfying alternative to continuing to smoke. Ultimately, BAT aims to support smokers to switch to these reduced-risk products in order to deliver benefits for consumers, society and our stakeholders.”

    The wider Glo range is sold in over 20 markets around the world. The Glo Hyper Pro device has been launched in Japan, Italy and Poland, with further global market rollouts planned during 2024.

  • Former BAT Russia Subsidiary Renamed

    Former BAT Russia Subsidiary Renamed

    Image: Patcharida

    BAT’s former Russian subsidiary in St. Petersburg has been renamed ITMS following the change in ownership, reports AB News.

    Last year, BAT announced problems with its Russian business and its intention to leave the Russian market following Russia’s invasion of Ukraine.

    The Russian and Belarusian businesses of BAT were acquired by a consortium led by BAT Russia’s management team.

  • BAT Nigeria Pays Anti-Competition Fine

    BAT Nigeria Pays Anti-Competition Fine

    Image: Maksym Kapliuk

    British American Tobacco has settled a $110 million fine imposed for abusing its market dominance in Nigeria, reports The Leadership.

    In Dec. 30 statement, BAT’s external affairs director for west and central Africa, Odiri Erewa-Meggison, said the penalty pertained to an investigation previously disclosed by the company in its 2022 annual report and updated in its half-year report for June 30, 2023.

    Nigeria’s Federal Competition & Consumer Protection Commission (FCCPC) started investigating BAT in 2020 and obtained a federal court order to search multiple BAT sites and those of service providers for evidence used in a forensic analysis.

    Among other transgressions, BAT had penalized retailers for providing equal platforms for its competitors’ products, according to the FCCPC.

    The competition watchdog will monitor BAT for 24 months to ensure appropriate behavior and business practice consistent with prevailing competition laws and tobacco control efforts.

    The fine, which is not eligible for appeal, is the highest ever levied by the Nigerian competition commission.

    Erewa-Meggison further acknowledged the monitorship and awareness campaigns stipulated in the consent order, confirming that BAT Nigeria has fully cooperated with the FCCPC’s appointed service providers.

  • BAT Nigeria Fined for Dominance Abuse

    BAT Nigeria Fined for Dominance Abuse

    Image: alexlmx

    British American Tobacco Nigeria has been fined $110 million fine following allegations of market dominance abuse and infringement of public health regulations, reports Reuters.

    The Federal Competition & Consumer Protection Commission (FCCPC) said BAT had also penalized retailers for providing equal platforms for its competitors’ products.

    The fine, which is not eligible for appeal, is the highest ever levied by the Nigerian competition commission.

    The FCCPC started investigating BAT in 2020 and obtained a federal court order to search multiple BAT sites and those of service providers for evidence used in a forensic analysis.

    The competition watchdog will monitor BAT for 24 months to ensure appropriate behavior and business practice consistent with prevailing competition laws and tobacco control efforts, the FCCPC wrote on X.

    “In exchange for BAT parties fulfilling their obligations under the consent order, the commission withdrew pending criminal charges against BAT Nigeria and at least one employee with respect to obstructing the commission,” the FCCPC wrote.

  • Lawyers Seize on BAT’s Impairment Notice

    Lawyers Seize on BAT’s Impairment Notice

    Image: Bits and Splits

    British American Tobacco’s recent decision to write down the value of some of its U.S. brands has spawned a frenzy among law firms eager to represent investors who feel shortchanged by the multinational’s move.

    On Dec. 6, BAT disclosed that it would take an impairment charge of approximately $31.5 billion after reassessing the value of certain cigarette brands, including Newport, Pall Mall, Camel and Natural American Spirit.

    The write-down reflects the diminished outlook for combustible tobacco products, according to BAT. CEO Tadeu Marroco described it as “accounting catching up with reality.”

    Following the announcement, BAT’s stock price fell by  8.5 percent, to close at $28.86 per share on Dec. 6, 2023, causing investors to lose money.

    At least three law firms, including Frank R. Cruz, Howard G. Smith and Pomerantz, have started investigating BAT on behalf of investors for possible violations of securities laws.

    Each of them is encouraging investors to join their legal cases.

    While acknowledging the short-term pain, others have praised BAT’s impairment as a realistic move, noting that it would be irresponsible to ignore the reality of a shrinking market for traditional tobacco products.

    In a recent op-ed for Tobacco Reporter, Brand Finance Group Managing Director Richard Haigh described the write-down as “a positive step in BAT’s journey toward a resilient future.”

  • Strategic Impairment

    Strategic Impairment

    Images: BAT

    BAT’s write-down of its U.S. cigarette brands is a positive step in its journey toward a resilient future.

    By Richard Haigh

    Earlier this month, BAT announced a $31.5 billion impairment on the value of some of its U.S. cigarette brands. The affected brands, including Newport, Camel, Pall Mall and Natural American Spirit, will see their value on BAT’s balance sheet adjusted to a finite lifetime of 30 years, resulting in a noncash impairment charge. This signifies the first instance where a major global tobacco company has written off some of the value of its traditional cigarettes business in a significant market such as the United States.

    BAT’s write-down highlights the challenges faced by traditional tobacco businesses in the wake of evolving industry dynamics. BAT attributes the move to economic challenges in the U.S., where inflation-weary consumers are shifting to cheaper brands, as well as the rise of illicit disposable vapes. Furthermore, intensifying regulatory environments and the heightened awareness of health risks have resulted in a decline in cigarette sales volumes in certain markets. These are predicted to continue to fall, with BAT adding that global tobacco industry sales volumes will be down around 3 percent in 2023.

    Responding to Change

    The decision to write down the value of some of its brands was a bold step for BAT because, despite the short-term pain, the reality is that the market for cigarettes is shrinking, and pretending otherwise would be irresponsible on the part of management.

    In the past, failure to embrace change has decided the fate of several top brands. Blockbuster, a giant in the video rental industry with thousands of stores worldwide, failed to recognize the shift toward online streaming and mail-order DVD services. In 2010, Blockbuster filed for bankruptcy, unable to compete with the likes of Netflix. Kodak, which resisted the shift to digital cameras, suffered the consequences, filing for bankruptcy in 2012. Nokia, once a dominant force in the mobile phone industry, struggled to adapt to the rise of smartphones and the popularity of app ecosystems. Nokia’s market share declined rapidly, and eventually, it sold its mobile phone business to Microsoft in 2014. These all serve as cautionary examples.

    BAT’s move is crucial in the context of the company consciously steering away from potential pitfalls, showcasing a commitment to survival and growth in new categories. The company is already investing heavily in alternative products, focusing on vaping and oral nicotine and wants 50 percent of its revenues to come from these by 2035.

    Appointed CEO in May 2023, Tadeu Marroco has played a crucial role in guiding the company through a transformative phase, emphasizing growth in emerging categories such as vapes and e-cigarettes.

    Correlation Between Leadership Tenure and Impairments

    Tadeu Marroco assumed the role of CEO in May 2023. Having previously served as BAT’s finance director, Marroco has played a crucial role in guiding the company through a transformative phase, emphasizing growth in emerging categories such as vapes and e-cigarettes.

    The correlation between tenure length and significant impairments is an interesting one to note. When assessing 2019’s largest impairments, a common thread emerges: new leadership, as depicted in the charts accompanying this text. In this context, BAT’s decision is not an isolated incident but rather a strategic response to industry challenges, reflecting a broader pattern observed in companies experiencing changes in leadership.

    When looking at 2019’s biggest goodwill impairments, except for Procter and Gamble and CenturyLink, all companies listed had either a new CEO, a new chief financial officer (CFO) or both. Most of these companies’ previous leaders decided not to take an impairment in 2018. CenturyLink did take an impairment in 2018, when it also had both a new CEO and CFO. Therefore, new leadership appears to have a significant impact on the likelihood a company will impair its goodwill. Among the entire sample, we found that 30 percent of all impairments occur within the first year of having a new CEO or CFO.

    For larger impairments, where the impairment represents at least half of the goodwill carrying amount, 41 percent of these occur within the first year of new leadership. At best, this analysis suggests that goodwill impairment can be influenced by varying personal opinions of management personnel and their perceptions of outlook and risk. At the worst, this analysis suggests that there may be an ulterior motive within the decision to impair goodwill. By taking an impairment at the beginning of your tenure as a CEO or CFO, it helps you to either set a precedent that suggests your predecessor was negligent/overoptimistic about their acquisitions or influence the share price to fall initially then rise throughout the rest of your tenure.

    Given these insights, the timing of the impairment—just nine months into Marroco’s tenure as CEO—aligns with broader trends observed in companies with leadership changes. Adding to the leadership transition, BAT has recently appointed a new CFO, scheduled to assume the role in April 2024.

    Looking Ahead

    BAT’s impairment announcement should be viewed as a positive and necessary step in the company’s journey toward a resilient future. Rather than focusing solely on the financial implications, stakeholders should recognize the strategic foresight behind this decision.

    However, the industry is consistently grappling with challenges. Plain packaging laws have notably evolved, gaining increased comprehensiveness in some countries. These regulations now extend their coverage from traditional tobacco products to encompass heated tobacco, tobacco accessories and other nicotine-containing items. Adding to the recent developments, this month, the World Health Organization has shifted its focus to vaping, urging governments to apply tobacco-style control measures to address this emerging concern.

    Therefore, BAT and other tobacco companies must proactively adapt their strategies, leveraging innovation and regulatory compliance, to navigate the evolving landscape and ensure long-term success in an industry marked by ever increasing health-related safeguards and regulatory barriers.

    Richard Haigh is group managing director at Brand Finance.