Fri, 29/06/2018 - 05:50
Current Issue 69
Next Generation Thinking
British American Tobacco in West and Central Africa has a strong history of making a positive impact on the industry, and is showing no signs of slowing down its innovative nature
Writer: Phoebe Calver
Project Manager: Joshua Mann
Africa Outlook (AfO): Can you tell us about British American Tobacco (BAT) in West and Central Africa from a historical point of view and how the Company has evolved over the years?
Freddy Messanvi, Legal and External Affairs Director for BAT in West and Central Africa (FM): British American Tobacco has invested over a century in West and Central Africa, with a very strong history of contributing positively to the economies of our host communities in the areas of foreign direct investment, tax contributions and human capital development amongst others.
Some areas of evolution in West and Central Africa include, British American Tobacco Ghana – formerly known as Pioneer Tobacco Company – which was incorporated on 1 November, 1952 as a wholly-owned subsidiary of British American Tobacco Company. We started cigarette production in 1954 at Takoradi using imported leaf. In 1953, we introduced tobacco cultivation on a commercial scale and provided about 80 percent of its major raw materials locally. The main factory in Takoradi was completed in 1959 and in 1988 a green leaf threshing plant was added to the factory. In 1999, Pioneer Tobacco Company adopted its international identity, and we have since been known as British American Tobacco Ghana.
Before 1987, small volumes of Benson & Hedges were smuggled in from Nigeria to Cameroon. In 1987, in an effort to ensure legitimate business was conducted, BAT concluded a high-profile acquisition of Bastos assets in Cameroon. Over the years, BAT distinguished itself from other competitors through improvements and upgrades of its primary brand offering, Lambert & Butler (L&B), which became the preferred brand of Cameroonian consumers. L&B is currently BAT’s biggest selling brand nationwide.
British American Tobacco has been present in Nigeria since 1912. The Nigerian Tobacco Company was created in 1951 with a 59 percent shareholding.
BAT Nigeria limited was incorporated on 11 July, 2000 and subsequently merged with the Nigerian Tobacco Company on 6 November, 2000. On 24 September, 2001, the British American Tobacco Nigeria formally signed a Memorandum of Understanding (MoU) with the Federal Government of Nigeria for the investment of $150 million to build a state-of-the-art factory in Ibadan, Oyo State.
AfO: Talk to us about the core range of products and services catered for by the Company across its divisions?
FM: In 2002, we took a decision to localise the manufacture of our brands whilst continuously improving our product quality and freshness. Our international brands, which were previously imported, are now produced locally in Nigeria.
Our brands are among our most important assets. This is the reason we take care to position them to adult consumers who have made an informed decision to smoke. To meet this requirement, we have a strong broad-based portfolio of international and local brands. Our marketing strategy is built on our understanding of our consumers and delivering the most relevant brands to meet differing preferences while retaining brand loyalty.
AfO: Throughout the Company’s evolution, what are some of the successes that have been achieved till date?
FM: In recent years in Nigeria, BAT was awarded Best Industrial Premises Award, 2016 by the Manufacturers’ Association of Nigeria and also the 2018 Lagos Chamber of Commerce & Industry Non-oil Export Award.
AfO: What major improvements have been made to your product range in recent times to ensure the company continues to move forward and reach new customers?
FM: We are continuously carrying out product research and learnings from the emerging consumers’ trends across the markets to drive our product improvement agenda. Our objective is to remain the benchmark in product quality for adult consumers who have made the informed decision to smoke. We also boast of a robust portfolio of brands that address all the known product needs/expectations across the markets.
AfO: What significant industry trends have you been monitoring and subsequently adapting to in recent times to ensure you are keeping ahead of the industry curve?
FM: A key industry trend we are passionate about is the Next Generation Products (NGPs).
It is part of the industry’s tobacco harm reduction drive. At BAT, we are dedicated to the development and commercialisation of alternative tobacco and nicotine products that don’t burn tobacco to deliver nicotine to the user.
Our growing range of potentially reduced-risk products includes our NGPs, such as vapour and tobacco heating products, and our oral tobacco and nicotine products. They are identified as the future of the tobacco industry and gradually making inroads into the market.
BAT is currently in 16 markets worldwide with its range of NGPs with plans for further expansion. Our plan is to drive and lead this category.
AfO: On a more internal note, what significant capital investments have been made in recent months to help facilitate your growth in the industry?
FM: At the BAT Factory in Ibadan, we have advanced our technologies by investing in Trigeneration, SMD automation (Filter shooting), and Track & Trace solution for our export countries. We also have purchased new equipment such as a 2MW backup generator, air compressors, HAVAC System chillers and upgraded our facilities through the installation of energy saving lighting and creation of ambient temperature in order to make the factory more conducive and enhance machine function and employee productivity.
AfO: Similarly, is there a local focus within the Company’s supply chain management strategy? What is the overall approach to procurement, logistics and distribution in terms of operational efficiencies and establishing business partnerships?
FM: BAT’s Supply Chain strategy in West and Central Africa is focused on operational efficiency, cost optimisation and customer satisfaction. Specific focus is on delivering high quality products to our distinguished customers in 15 West African countries including Nigeria, thereby ensuring quality product availability at the right cost.
We focus on capital optimisation through inventory reduction and optimisation across all our raw materials. We deliver continual improvements in the following key areas: Reduced clearing lead times by standardizing documentation process; Logistics tenders and Network optimisation; and Minimising exceptional cost through an efficient supply chain.
Moreover, BAT in West and Central Africa believes and runs highly ethical and sustainable supply chain principles that are reflected in our approach to supplier recruitment and management and are emphasised in our relationships with our supply and trade partners.
AfO: To what extent does BAT in West and Central Africa involve itself in corporate social responsibility (CSR) initiatives, and what examples do you have in this area?
FM: BAT Nigeria Foundation was established in 2002 to empower rural Nigeria for a sustainable future. Prior to 2012, we had four mandate areas. Since 2013, our sole focus has been on developing sustainable agricultural enterprises for smallholder farmers.
Essentially, we fund rural agricultural enterprises to move farmers from subsistence to commercial farming. We create young agric-preneurs by encouraging a commercial mindset towards agriculture.
AfO: Looking forward, if we are to speak again in three to five years’ time, what would you hope and expect to be able to report back in terms of company development?
FM: Over the years, we have been able to consolidate our initial investments by devoting more to the economies of countries where we operate to ensure socio-economic and environmental development, especially in the agricultural sector. This we hope to continue.
BAT will continue to drive the agenda of the Government to grow the non-oil export sector by ensuring that the Nigerian economy is not only focused on oil export to generate foreign currency but also on the export of non-oil commodities from Nigeria, which provides an alternative to generating foreign currency while demonstrating a consistent improvement to the development of the real sector.
We will continue to abide by all laws of the countries we operate in and will constantly explore safer and new offerings to consumers as our commitment to tobacco harm reduction. Such offerings will make it possible for consumers to have more choices in accessing a range of potentially safer products in West and Central Africa.
Overall, our ambition in the next five years is to be an exemplary leader in our industry who demonstrates the ability to be responsible despite the peculiarity of our products. This would be reflected in our sustained corporate social investments, foreign direct investments, human capital investments, contribution to tax revenue growth, amongst others.
Our hope is to bring our NGPs to the market, this is driven by our desire to offer consumers potentially reduced risk alternatives to smoking.