Fri, 27/10/2017 - 06:50
Current Issue 55
BAT is leading the tobacco industry by satisfying and addressing consumer needs and moments
Writer: Phoebe Calver
Project Manager: Joshua Mann
British American Tobacco East & Central Africa Area (BAT ECAA) has diligently contributed to economic growth in its countries of operation, integrating systematic year-on-year investments into manufacturing, human resource development, product development and sustainability.
BAT ECAA comprises 14 markets which are working together not as a trading entity, but as a geographical cluster of markets. The countries within this cluster include Kenya, the Democratic Republic of Congo (DRC), La Reunion, Mauritius, Somalia, Somaliland, Rwanda, Tanzania, South Sudan, Djibouti, Comoros, Mayotte and Madagascar.
There are currently more than 600 people directly employed by BAT across ECAA, with a further 85,000 individuals indirectly engaged through wholesale and retail distribution, agriculture and other third-party business partnerships. BATECAA’s tobacco growing operations partner with and support the livelihoods of more than 5,900 contracted farmers.
According to BAT ECAA Area Director, Beverley Spencer – Obatoyinbo, sustainability is at the core of the business: “It is pivotally important to us that we improve our local area through our operations. This includes strengthening our approach to human rights, advancing sustainable agricultural practices amongst our farmers, driving efficiencies in manufacturing processes, developing industry-wide security systems to prevent tobacco trafficking and investing in our markets, our brands, our new product categories and our people, to name a few.
“We have also contributed to economic growth across the markets we operate in. In Kenya alone, over the past five years, we have invested more than US$103 million in tobacco farming, leaf processing and our cigarette manufacturing factory in Nairobi.”
Over the past decade the BAT Kenya factory in Nairobi has become a strategic manufacturing hub for the BAT Group; and in 2016 more than 60 percent of its factory output was exported to 13 countries outside Kenya. Further, the Area’s operations have contributed significant tax revenues to the governments of the various markets it operates in, amounting to approximately
US$ 2 billion within the past four years. In addition, the company has been recognised as a Top Exporter by the Kenya Revenue Authority.
Business performance for the Company has remained robust despite a tough macro-economic environment characterised by rising inflation and lower disposable income, spreading across all of BAT ECAA’s markets of operation.
“Recently we have seen a sharp increase in taxation as the various governments try to balance their budgets,” adds Sidney Wafula, Area Head of Finance. “This has meant an increase in consumer prices, which has reduced the affordability of cigarettes, putting pressure in general on our consumers.
“Despite these challenges, our operating profit has increased by five percent CAGR over the past five years, driven by pricing, introduction of innovative and affordable products and stringent cost containment measures, which include productivity initiatives and business restructuring to take advantage of technology and new improved ways of working.”
The key challenges faced by the business include the illicit and duty-not-paid tobacco products, inequitable and unsustainable tax increases, protectionist government policies and draconian legislation that inhibits BAT ECAA’s ability to meet the needs of its consumers.
“Despite these challenges, we continue to focus on our mission to be the best at meeting our consumers’ needs. We will provide innovative quality products while pursuing opportunities to enter new markets to further grow shareholder value,” explains Wafula.
“In order to be the best at satisfying consumer moments in tobacco and beyond, a central part of our strategy is to achieve a portfolio of inspiring and innovative products,” states Darryn Bassa, Area Head of Marketing. From an innovation perspective, we have introduced new-to-market capsule offers which deliver multiple flavours in one cigarette for key brands such as Dunhill, Rothmans and Benson & Hedges into markets such as Somalia, Kenya and Mauritius.”
Tolga Kilic, General Manager for East African Markets adds: “BAT has a long history in the ECAA region and therefore the consumers in these markets trust our brands and have interacted with them for many years. For example, the Company has been in operation in Kenya for over 100 years and has been listed on the Nairobi Securities Exchange (NSE) for almost 50 years.”
The BAT Group has been a leading tobacco company in the world for over a century and is now the largest publically traded tobacco company in the world after its acquisition of Reynolds American in mid-2017. The combination of these factors has enabled BAT ECAA to build valuable knowledge to support and build its brand portfolio, combining local strength and global trends, satisfying current consumer requirements.
Building a legacy of leaders
In order to keep up the excellent standards that the Company has been delivering for the past century, its recruitment processes ensure that the right talent is sourced for the right roles.
“Our focus is to recruit locally within the territories we operate. Primarily we hire by utilising a direct sourcing model on our company’s careers portal (www.bat-careers.com),” Razeeah Belath, Area Head of HR describes. “Our recruitment staff undergo accreditation through our ‘Licence to Hire’ course, enabling them to focus on the right people, their capabilities and future potential.
“We also have an internal referral initiative named, Like Minds’, serving to boost employee advocacy through referring like-minded individuals while rewarding its staff for their efforts.”
Alongside the various initiatives across ECAA, BAT’s global footprint provides numerous opportunities for staff to acquire global exposure through cross-geographical courses and assignments in addition to the cross-departmental opportunities available locally.
“We aggressively export talent to our sister companies across the group which contributes in developing our talent for senior leadership roles. We are extremely proud of our local staff who are cuurently lending their expertise to other BAT entities, including the BAT Asia Pacific Area office, BAT Denmark, and BAT Vietnam,” continues Belath. “We believe in providing a ‘great place to work’ for our teams and building a winning organisation through our guiding principles, one of which speaks to ‘strength from diversity’. We harness the diversity of our people, cultures, viewpoints, brands, markets and ideas to strengthen our business.
“Thanks to our superior HR practices, we have been recognised as a top employer in Kenya and Africa, by the top employer institute, most recently in October this year.”
Building a sustainable business
“As an international business, we play an important role in the communities we operate. Beyond our corporate social investment initiatives across ECAA, we have programmes that ensure the long-term sustainability of our tobacco leaf supply chain and enhance farmer livelihoods,” explains Seyi Adeyemo, Area Head of Operations. “Our long and proud history of working directly with farmers and advancing agricultural practices, benefits our farmers by giving them the resources and support they need to be successful, as well as helping to secure our long-term supply of tobacco leaf and ensuring the integrity and quality of our products to satisfy our consumers.”
Simukai Munjanganja, Area Head of Legal & External Affairs adds, “While we have experienced an increase in the restrictions on the manufacture, packaging, marketing and sale of tobacco products across ECAA, we are clear that we support regulation that is based on robust evidence, respects legal rights and livelihoods and delivers on the intended policy aims. We will thus continue to seek opportunities to contribute to the debate, offering information, ideas and practical steps and work with the regulators addressing industry issues.”
“Moving forward, while traditional tobacco products continue to be the mainstay of our business, as a group, BAT is also at the forefront of developing products that offer consumers potentially less risky alternatives to regular tobacco products. These Next Generation Products (NGPs) include Vype, our vapour product, and glo, our tobacco heating product. The bat Group has invested more than us$1 billion over five years in developing a world-leading portfolio of products in the NGP category – not just because they are an exciting new opportunity, but also because they have the potential to reduce smoking-related diseases.” concludes Munjanganja.
Looking ahead, BAT ECAA is excited about their business outlook and continues to invest towards this promising future.