BAT Seeking More Markets For ‎‎'Premium' Brands‎

Mr. Mwaniki: Praised 'Going for Quality Growth' theme.

Nairobi, May 8, 2006 – Cigarette manufacturer British American Tobacco Kenya is eyeing the export market as a future growth area in the wake of increased competition and proliferation of illicit cigarettes in the local market.

The revelation was made by the company chairman Evanson Mwaniki in Nairobi last week during the company's annual general meeting.

Traditionally, Somalia has been the company's' number one export market, where Sportsman has been the leading brand over the past decade. Newer export markets include Tanzania, Uganda and the Democratic Republic of Congo. Last year, the company also started exporting to Ethiopia, Malawi, Mauritius and Comoros.

The regional push commenced early last year when the company invested Ksh370 million ($5.13 million) to enhance the factory's productivity, quality and capacity for contract manufacture business, which yielded a 13 per cent increase in turnover and a 15 per cent increase in pre-tax profits for the year ended December 31, 2005.

The export and contract manufacture volumes have since increased by 158 per cent.

This new business stream was started in late 2004 and was fully implemented last year, with the inaugural brands of Benson & Hedges, Royals, John Player Gold Leaf and Burrus destined for markets in Djibouti and Somaliland.

Addressing the shareholders last week, Mr. Mwaniki praised the new marketing theme "Going for Quality Growth" that is geared towards driving volume growth and market share by focusing on premium brands.

"Our focus will be on driving volume growth and market share and improvements in the brand mix concentrating on premium brands, that offer opportunities for growth," Mr. Mwaniki said.

Last year, the company launched Dunhill, an internationally known brand, and Pall Mall early this year. The two brands are performing well.

The company is already undertaking a Ksh1 billion ($13.8 million) expansion project at its Nairobi factory geared towards transforming the plant into a regional centre of manufacturing for East and Central Africa and the Horn of Africa as well as the Indian Ocean Islands and Southern African countries.

The project is set for completion next month and will allow fuller utilization of its installed capacity thus bringing down the unit cost of manufacturing and helping utilize the increased export capacity.

Only last month, the company closed its Uganda factory and moved its manufacturing to Nairobi, leaving Uganda to concentrate on leaf growing and processing for export. From Kenya, the company will be able to distribute products to all its markets.

During the year, the company was awarded a AA+ rating by Global Credit Rating Company for its sound financial base-making it the highest independently credit rated corporate in Kenya.

However, the optimism for an even stronger performance this year might be curtailed following the tabling of the Tobacco Control Bill before the parliamentary committee on health, housing, labor and social welfare last week.

According to Keli Kiilu, the Corporate and Regulatory Affairs Director , the company has already forwarded its position on the bill that seeks to regulate the tobacco industry.

Source: The East African