28 February, 2021
During the 2020 COVID-19 pandemic, transnational tobacco companies continued to sell their cigarettes while stepping-up sales of vape and heated tobacco products. The pandemic may have caused temporary disruption to their business, but they bounced back and the companies made profits.
World No.1 tobacco company, Philip Morris International (PMI), reported an operating income of $11.69 billion in 2020, up 10.8% over 2019. It reported its net revenues were down 3.7% to $28.69 billion for the full year. It sold more than 628 billion cigarette sticks in 2020, down 11% from 706 billion in 2019. The company’s shipments of heated tobacco units (HTU) increased about 27% to 76 billion in 2020. It sold more than 233 billion sticks of Marlboro cigarettes.
For 2021, PMI is planning to launch its IQOS VEEV, (MESH technology vapor product), in 20 more markets. By 2025, PMI expects to sell IQOS in 100 markets, up from the current 64 markets. PMI announced its target of at least $1 billion in net revenues from “beyond nicotine” products in 2025.
World No. 2 company, BAT’s Chairman celebrated the company’s 2020 performance stating, “I’m really happy with the resilience demonstrated by our combustible business throughout the year which has shown its ability to deliver whatever the environment.” “We saw significant recovery in our emerging market (70%) volume in the second half and this has continued into 2021.” In 2020, Revenue – £25.7 billion. Profits increased to £9.9 billion (from £9 billion in 2019).
In the ASEAN region, Indonesia, Malaysia and Vietnam remain BAT’s key markets. Its financial report indicates:
- Combustible revenue increased 2.8%; dynamic response to supply chain disruptions & government mandated shutdowns ensured no combustibles are out of stocks.
- Sales force adapted routes to market against disruption.
- glo Hyper launch switched to digital making it the most successful glo launch to date.
World No.3, the JT Group reported an operating profit of ¥469.1 billion ($4.48 billion) for 2020. While Japan Tobacco’s net profit dropped 10.9% to ¥310.2 billion, however it is still substantial. Its sales fell 3.8 percent to ¥2.09 trillion ($19.95 billion) in 2020 from the previous year according to its 2020 financial report. JT’s international tobacco business sold 435.7 billion units in 2020, which is 2.3 percent less than in 2019.
According to its president, “During this period, we grew share in most of our key markets and captured pricing opportunities. … While we expect the operating environment in 2021 to remain highly uncertain, we expect to continue gaining market share globally both in combustibles and in RRP.”
World’s largest transnational tobacco companies 2018
|Rank||Company||Global Market share %|
|1||Philip Morris International||36.3|
|1||British American Tobacco||23.4|
|1||Japan Tobacco International||11.8|
Source: Tobacco Asia, Issue No.1 2021 January/February
Imperial Brands (Tobacco), a U.K. company, at its annual general meeting on 5 February recorded an increase of 1.8% net revenue. During the pandemic period of lockdowns, restricted travel and social distancing, its new CEO had met with “all 12 of its business clusters, all their major functions, hosting around 300 virtual or physical meetings.” It is the fourth largest tobacco company operating across 120 countries with annual revenue of £8 billion (about $11 billion). Imperial’s five priority markets which account for 72% of its operating profit, the top brands are still cigarettes. It already has a plan on how it is going to expand its business.
Korean company, KT&G, currently 5th largest tobacco company in the world, is aiming to become 4th largest by 2025. Last year, despite challenges posed by the pandemic, KT&G added a further 23 export destinations to its foreign portfolio. Between July and September 2020, the group sold 24.6 billion sticks, including 12.7 billion sticks overseas, which represented an increase of 30.9 per cent compared with a year earlier.
KT&G acquired Indonesia’s sixth-largest tobacco manufacturer, Trisakti in 2011. The number of KT&G’s cigarette sales in Indonesia increased by 145, from 4.9 billion sticks in 2018 to 5.6 billion sticks in 2019. Its top international brand is Esse.
The tobacco industry did not allow the pandemic to restrict its business of selling and profiting from its addictive products. Clearly it plans to increase sales of both cigarettes and other tobacco products even more in 2021. The importance of denormalizing the tobacco industry is more important now than ever and the need to step-up tobacco control efforts is urgent.