BRITISH AMERICAN TOBACCO SOUTH AFRICA
BRITISH AMERICAN TOBACCO SOUTH AFRICA
Smoking the Competition for Over A Century PRODUCTION: Benjamin Southwold
British American Tobacco has a long legacy in South Africa. Present and dominant in the country for more than 100 years, the company’s official history began with the creation of the United Tobacco Company in 1904 and has seen it grow into the country’s leading cigarette manufacturer and distributor. www.enterprise-africa.net / 3
INDUSTRY FOCUS: AGRICULTURE
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Tobacco is big business in South Africa. The recently released, ‘South African Tobacco Industry in South Africa 2018’ report puts its estimated value at R28.8 billion, and calculates that it is supported by some 8.2 million adult tobacco users. The sector is also a heavy contributor to the government purse, one which paid more than R16.6 billion in excise duty and VAT in the 2016/2017 marketing season. A 2017 national survey found that about 20% of South Africa’s adult population, aged 15 or over, smoked cigarettes. There are 176 commercial tobacco farmers and 155 small-scale tobacco farmers in South Africa adding up to a total annual tobacco crop in the region of 15 million kilograms, 90% of which is used in South Africa in the manufacture of high-quality tobacco products.
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BIGGEST PLAYER British American Tobacco South Africa (BATSA) is the largest tobacco manufacturer and distributor of tobacco products in the country in this most profitable of markets. In 2016, market research company Euromonitor International put BATSA’s market share at 74%, trailed distantly by Japan Tobacco International (JTI) (9%) and Philip Morris International (8%). Not only the biggest enterprise in this hugely gainful market, BATSA is also proud to stand as the sole tobacco company to be featured in the prestigious Dow Jones Sustainability World Index. First published in 1999, the DJSI represents the gold standard for tracking corporate sustainability performance among the world’s largest companies in the Dow Jones Global Total Stock Market Index (DJGTSMI).
// WE ARE THE ONLY TOBACCO COMPANY TO HAVE MADE THE CUT FOR THE DJSI WORLD, MAKING US THE TOBACCO INDUSTRY LEADER // The methodology employed measures companies’ adherence to the sustainable business principles that each candidate advocates, and how well these are communicated to investors and other stakeholders. Simon Cleverly is Group Head of Corporate Affairs at British American Tobacco, and was unequivocally heartened by the company’s repeated
Proud supply chain partner to British American Tobacco South Africa since 2010.
INDUSTRY FOCUS: AGRICULTURE
feature among the best in the world. “We are delighted to be included, yet again, in the Dow Jones Sustainability Indices,” he said. “Not only is this our 17th consecutive year of being listed, but this year we are the only tobacco company to have made the cut for the DJSI World – making us the tobacco industry leader. “We are incredibly proud that our world-class sustainability agenda continues to be recognised by such a prestigious external organisation – a testament to, among other things, our commitment to upholding the highest standards of corporate conduct across the world, to our tobacco harm reduction activities and to ensuring we market our whole range of cigarette and potentially reduced-risk products in a responsible manner to our adult consumers.”
TOP EMPLOYER The awards just keep coming for British American Tobacco, as it has once again been recognised by the Top Employers Institute as one of the best companies to work for in Africa. The Top Employers Institute conducts independent and internationally verified research into how a company looks after and develops its people, and only organisations that achieve certification in at least four countries within the region earn the special 2019 Top Employers Africa recognition. This is the second year running that BAT has achieved the African certification, having been recognised as a top employer in South Africa, Angola, Zambia, Zimbabwe, Mozambique, Kenya and Nigeria.
// WE ARE EXCITED ABOUT ACQUIRING A LEADING VAPOUR BRAND AND THE OPPORTUNITIES IT PRESENTS // The South African top employer certification, meanwhile, was awarded for the tenth year running. Of this sustained recognition, BAT commented: “Having operated in South Africa for more than a century, we boast a brand portfolio of 22 distinct brands, with a workforce of over 2000 employees. As one of the largest companies on the JSE we are proud to have been consistently
(c) Top Employers Institute. Photo - Simphiwe Nkwali. LtoR Francis Mwale, Soraya Benchikh, Wendilene Balie - BAT SA Management Team
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BRITISH AMERICAN TOBACCO SOUTH AFRICA
// AS ONE OF THE LARGEST COMPANIES ON THE JSE WE ARE PROUD TO HAVE BEEN CONSISTENTLY CERTIFIED AS TOP EMPLOYER FOR THE LAST COUPLE OF YEARS // certified as Top Employer for the last couple of years. “We are driven by our commitment to transformation and we believe that our people are our greatest assets and our investment in their training and development has resulted in a strong culture of leadership and resilience. Our diversity remains one of our many strengths. SECURING SUCCESS As an increasing number of competitors emerge into this most appealing of markets, BATSA has made a range of moves to cement its success for another century to come. One of the most important was its agreement to acquire 100% of Twisp Proprietary Limited, a vapour company based in South Africa. This is in line with BAT’s aim is to grow the next generation products (NGP) category of its offering, to offer consumers a wider choice of alternatives to smoking.
The vaping market, which has created more than 4000 jobs in the wholesale and retail sectors, is expected to generate an additional 10,000 jobs in South Africa over the next decade. This is according to Vaping Products Association of SA (VPASA) spokesperson, Fidel Hadebe. One factor in the e-cigarette industry’s continued strength in South Africa is going is many smokers’ decision to switch to vaping in a bid to quit smoking, with many health experts having advocated vaping as an alternative to smoking. BATSA CEO Soraya Benchikh said Twisp is a leading vaping supplier in SA and that the acquisition will contribute towards BAT’s growth and sustainability. “We already have a large footprint elsewhere in the world. We are committed to the growth of our NGP business and it was only natural that we extend our offering in SA with a range that is familiar to this market. “We are excited about acquiring
a leading vapour brand and the opportunities it presents.” BAT has set itself for widespread success for the foreseeable future, as the most recently-released global results confirm. “In the first six months of 2018, the Group continued to perform well,” BAT commented. “The cigarettes and THP portfolio has outperformed the industry as market share grew 40 basis points (bps) with a tobacco price mix of approximately 4%, which is expected to strengthen in the second half of the year. “Our strategy is to continue to grow our combustible business while investing in the exciting potentially reduced risk categories of THP, vapour and oral,” BAT outlined. “As the Group expands its portfolio in these categories, we will continue to drive sustainable growth. “We anticipate another good year of adjusted earnings growth at constant rates of exchange.”
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