BAT’s cigarette sales volumes recover from SA ban on tobacco

BRITISH American Tobacco (BAT), the world’s biggest tobacco company, yesterday recorded a 1.8 percent increase in group cigarette volumes to 316 billion sticks during the first half to the end of June, up from 310.5 billion sticks a year earlier, driven by the recovery in emerging markets, including South Africa.

BAT, whose cigarette brands include Peter Stuyvesant, Dunhill, Rothmans and Kent, said the South African market had recovered from the Covid-19 lockdown and the ban on sales from April to August last year.

BAT said South African vapour revenue had also recovered from the impact of the Covid-19 pandemic during the half-year to the end of June.

“In South Africa, vapour revenue recovered from the suspension of sales, alongside cigarettes, as part of the country’s Covid-19 response. South Africa followed the successful migration to the Vuse brand seen in other markets, including in Canada last year, with the migration from Twisp in the first half of the year,” said the group.

BAT acquired Twisp, South Africa’s largest distributor of vaping products, in 2019.

BAT South Africa (Batsa) has fought an uphill battle to convince the government to act against the illicit trade in cigarettes that has seen its volumes decline significantly after the lifting of the almost five-month sales ban imposed as part of measures to curb the spread of Covid-19.

Batsa has previously complained that the sales ban turned the local tobacco market upside down, and South Africa now had the biggest illicit

market in the world.

At a group level, BAT said e-cigarette and vaping revenue had been boosted.

Chief executive Jack Bowles said the six months under review had been an exciting period of growth in new categories, with new category constant currency revenue up by 50 percent in the first half.

“We added 2.6 million consumers, our highest-ever increase, to our

non-combustible product consumer base, to reach 16.1 million. This demonstrates our accelerating transformation driven by our multi-category portfolio, with continued key market share gains in all three new categories,” said Bowles.

Bowles said BAT was building strong, global brands of the future with Vuse, Velo and glo.

“These are underpinned by industry-leading multi-category consumer

insights and science, with increasing digitalisation. We have invested a further incremental £346m (about R7.2 billion) in the first half, funded by continued value growth from combustibles, and expect to reach our £1bn Quantum savings target 12 months early. We have now increased our savings target to £1.5bn by 2022,” BAT said.

BAT shares closed 0.94 percent lower at R563.38 on the JSE yesterday.