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How BAT Plans to Create a More Efficient and Focused Company
BAT offices in Brazil.
BAT
How BAT Plans to Create a More Efficient and Focused Company
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From Staff Reports
British American Tobacco (BAT) announced on September 12 that it would take steps to simplify its business and create a “more efficient, agile and focused BAT.”
This will ensure the company is better placed to meet ever-evolving consumer needs and deliver savings that can be reinvested in the growth of its portfolio of New Categories such as vapor, tobacco heating products and oral tobacco.
To enable better focus on key growth areas; faster decision making; greater management accountability and the elimination of duplicative activities, the proposals will:
• reduce layers of management;
• create fewer, more accountable business units;
• leverage its Global Business Services activities more effectively; and
• simplify all key business processes and ways of working.
This program, scheduled for completion by January 2020, envisages a reduction of around 2,300 positions globally. With the focus on simplification and removal of management layers, it is expected that over 20 percent of the senior roles in the organization will be affected.
A consultation process is now under way with all staff who will be impacted.
Jack Bowles, BAT’s new Chief Executive, said: “Since taking on the role of Chief Executive five months ago, I have been clear that I wanted to make BAT a stronger, simpler and faster organization and ensure a future fit culture. My goal is to oversee a step change in New Category growth and significantly simplify our current ways of working and business processes, whilst delivering long-term sustainable returns for our shareholders. This is a vital first move to help achieve these goals.”
A program of this magnitude involves decisions that will be difficult. “But ultimately it is the right thing for our business.”
He hoped that “BAT will be better placed to deliver on its target of generating £5 billion of revenues in New Categories by 2023/24 as a result of the program.”
Response from investors was cautiously favorable.
Bloomberg News analyzed the move by saying, “BAT has tempered the outlook for growth of smoking alternatives. The cost-saving program will help the company reach its goal of getting £5billion in revenue from new products by 2023 or 2024.”
Russ Mould, investment director at AJ Bell investments, said, “[This] announcement represents a bold first step for new chief executive Jack Bowles. But he must hope the crackdown on vaping doesn’t see his growth ambitions run out of puff.”
A Defense Against Underage Vaping On the same day that BAT’s reduction in force was announced, the chief marketing officer of BAT, Kingsley
Jack Bowles, BAT CEO.
Wheaton, said his company plans to cooperate fully in efforts by FDA or other government agencies in keeping vaping out of the reach of underage consumers.
Kingsley Weaton, BAT CMO
BAT
“Given the tragic cases reported in the U.S. recently, we fully support the FDA’s efforts to ensure the safety of those consumers who use vaping liquids and devices,” said Wheaton. “As the world’s second largest vapor company, providing high quality products to more than 9 million consumers worldwide, we take our consumer safety responsibilities very seriously.”
Vype, like all of BAT’s potentially reduced-risk products, utilizes only toxicologist-scrutinized ingredients and components.
BAT remains convinced that children should not use vapor products, he said. “We have had stringent measures in place to address this issue for some time. Accordingly, we share the FDA’s concern that the marketing of some flavors could resonate with children. At the same time it is hard to overestimate the role that the responsible marketing of flavors plays in helping adult consumers move on from combustible products to alternative tobacco and nicotine products.”
BAT has invested billions of dollars in the research and development of its potentially reduced-risk products, he said. “The ingredients and components used in these products have been scrutinized by our team of 50 toxicologists for their suitability for vaping.”
Consistent with this, BAT does not include oils containing THC or Vitamin E Acetate in these products.
A Blueprint for Compliance BAT’s subsidiary Reynolds American has acted aggressively in the USA to address the problem of youth access, he said:
• Reynolds has developed and subsequently named its flavors to appeal to adult consumers rather than children.
• Reynolds age verifies through a third-party vendor that all potential online purchases are 21 or older.
• Reynolds participates in ‘We Card,’ an organization nationally recognized for retailer education and training for age-restricted products.
Sample point-of-sale age verification materials for retailers from ‘We Card.’
wecard.org
• Reynolds funds ‘Right Decisions Right Now: Be Tobacco Free’ (RDRN), an evidence-based, independently tested youth tobacco prevention education program started in 1991 for use by middle-school educators, parents and community groups.
Softball poster from ‘Right Decisions Right Now: Be Tobacco Free’ (RDRN).
Photo: rightdecisionsrightnow.com
• Reynolds currently has a purchase limit of US$200 per transaction. It plans to implement a more stringent limit of US$80 per week and three devices per quarter.
• Reynolds has implemented guidelines that restrict marketing and advertising for its vapor products: * No testimonials will be used by sports figures or celebrities or any person with special appeal to persons under 21 years of age;
* No person appearing in any advertising materials shall be under age 25 or styled to look under age 25;
* Content shall not include characters, images, or themes designed to target youth;
* Content shall not be related to youth or youth-oriented activities;
* Content shall not suggest that use of R.J. Reynolds Vapor Co. products is essential to social prominence, distinction, success or sexual attraction nor shall any content picture a person using any RJRVC products in an exaggerated manner; and
* Content shall not depict persons participating in, or obviously just having participated in, a physical activity requiring stamina or athletic conditioning beyond that of normal recreation.
