BAT invests $1bn in next generation products
TOBACCO giant British American Tobacco (BAT) said yesterday that it had invested more than $1 billion (R13.15bn) in building its next generation products business in the past five years.
The next generation products include Vapour Products (e-cigarettes) and Tobacco Heating Products.
Chief executive Nicandro Durante said it was now a good time for the group to invest in this market, because the global next generation products market was estimated to be worth some £15 billion (R240bn) by 2020 (excluding the US).
“We believe our strategy positions the group to capture a significant share of this exciting market in the future and will contribute substantially to future growth of the business,” he said.
BAT is a global tobacco and next generation products company with brands sold in more than 200 markets.
Kingsley Wheaton, the managing director of Next Generation Products at BAT, said in December that the group opened its first Vype branded store in Milan, Italy and at the same time launched a new type of Vapour Product, Vype Pebble. The Tobacco Heating Product range includes iFuse, launched in Romania in 2015 and glo, which the company launched in Japan in November 2016.
Choice “Our aim is to offer our consumers a choice of a range of different products, from traditional cigarettes through to less risky alternatives. These new products offer us another opportunity to further grow our business, while also having the potential to reduce smoking related disease, because they are considered to be less risky than normal cigarettes,” said Wheaton.
Going forward the group wants to grow even further by making strategic acquisitions. It said its long-term prospects would be strengthened by the proposed acquisition of the remaining 57.8 percent of Reynolds American.
“We are very pleased to have reached agreement with the board of Reynolds American in January to acquire the remaining 57.8 percent of Reynolds American that we do not already own, subject to obtaining the relevant shareholder and regulatory approvals,” added Durante.
The group said it had consistently delivered on its strategy of delivering growth, while investing for the future. “This deal will create a stronger, truly global tobacco and next generation products business that will be positioned to drive continued sustainable profit growth and returns for shareholders long into the future,” he said.
The global tobacco industry sells around 5 600 billion cigarettes each year and is valued at an estimated $770bn.
The market is also one of the most highly regulated in the world, with tobacco subject to extensive product and taxation requirements in nearly all countries and markets.