BAT sees strong 2-digit growth

MANILA, Philippines - British American Tobacco (BAT) sees a “strong double-digit” growth in its Philippine operations this year, largely due to robust sales of low-cost brand Pall Mall and flavor-changing cigarettes Lucky Strike Click & Roll.

In a briefing, BAT Philippines general manager  James Lafferty said the company expects 2014 to be another great year, noting that Pall Mall, which sells for P32 a pack, has emerged as the second leading brand in 7-Eleven stores.

Lafferty likewise cited the success of Lucky Strike’s Click & Roll cigarettes which contain a menthol capsule in the filter that is activated when the filter is clicked.  Thus, a smoker  can either enjoy the classic Lucky Strike taste experience or opt for menthol flavor.  Click & Roll has a retail price of P52 per pack.

He said BAT’s meager market share in the $4 billion Philippine tobacco industry, has improved quarter-on-quarter since last year.

 â€œWe remain a small player in the Philippines but we’re very happy with our market share, which has been improving.  We beat all our targets last year.  We’re very pleased with the government’s efforts to maintain a level playing field.  The sin tax rule is a complete victory for the government,” Lafferty said.

Lafferty likewise reiterated that  higher taxes on cigarettes and alcoholic products would not have a significant impact on tobacco consumption or use.

The Philippines currently has one of the highest smoking rates in Asia. Cigarettes are likewise comparatively cheap in the Philippines with a pack costing as low as P25 or P26.

“Consumption  will remain at current levels  until 2017,” the BAT official said.

Under the sin tax reform law, which took effect in January last year , the government, through the BIR, is tasked to implement low and premium tax rates for cigarettes from 2013 to 2016.  By 2017, a single rate of P30 per pack will be enforced.

Lafferty noted that Philippine tax rates on cigarettes remain the lowest in Southeast Asia.

As proof of its commitment to the Philippine tobacco market, BAT has already invested over $100 million of its $200 million five-year capital spending program.  It likewise doubled the number of tobacco leaves procured from local farmers or from Universal Leaf Phils Inc. to 3.6 million, valued at around $12 to $16 million.

BAT intends to buy another 3.6 million tobacco leaves this year to further beef its presence in the country. The purchase is equivalent to nearly five percent of the total projected harvest.