2 May 2022
UK company, British American Tobacco (BAT) had its annual shareholders’ meeting on 28 April where it celebrated its GBP 10.23 billion (USD 12.87 billion) profits for 2021 and chartered its way forward to sell more tobacco products. BAT’s overall strategy is to sell more cigarettes to be able to help reduce harm to its customers.
While this sounds ludicrous and makes no public health sense, this is the way BAT, whose profits depend mostly on cigarette sales, is justifying selling even more cigarettes in the future. Its CEO’s speech made it clear that, “Driving value from our combustibles business remains a priority to fund the investment in our New Category products and in the science behind them, in order to deliver greater progress on tobacco harm reduction.”
In the ASEAN region, BAT dominates the cigarette market in Malaysia and has significant market share in several other countries (Table 1). BAT continues to oppose government tobacco control efforts which mostly affect cigarettes such as tax increase, plain packaging, and comprehensive ban on advertising and promotions.
Table1: BAT cigarette market share in ASEAN region * ~
Following the parent company, BAT Malaysia (BATM)’s “A Better Tomorrow” includes growing its revenue through cigarettes sales, because “traditional cigarettes will be at the core of our business for some time.” BATM is aiming to provide, “greater choice” of cigarettes and other products and has no plans to stop selling cigarettes.
Although smoking is a risk factor for COVID-19, BATM is celebrating that it had increased cigarette sales through a “stellar performance in 2021”, with the volume growing for the first time since 2002. Total revenue for BATM increased by 14% (RM322 million) when compared to 2020. The increase was driven by higher sales of 10%.
While tobacco advertising and promotions are banned, BATM claims, “Our brands recorded share growth across all segments”. The WHO FCTC Article 9 calls for a ban on misleading descriptors but BATM categories its cigarettes as “Aspirational Premium” segment (Peter Stuyvesant, Pall Mall) and “Value-For-Money” segment or cheap brands (Rothmans and KYO).
In 2021, despite the pandemic BAT launched new brands, KYO Switch and KYO Full Flavour, referring to the KYO brand as the “fastest-growing modern consideration offer”.
According to BATM, it does not advertise but it claims to “engage” with its customers and provide product information through “full time call centre that attends to consumer queries and provide necessary information to keep consumers updated.” It does not disclose what this really means or whether this complies with the comprehensive ban on tobacco promotions in Malaysia.
During the pandemic and the intermittent periods of lock downs in 2021, BAT claims its supply chain team “played a critical role in ensuring business continuity”. Its factory in Johor Bahru was closed for three months but not to disrupt cigarette supply to the market, BAT obtained its supply of cigarettes from Singapore.
In 2021, BATM, together with the other tobacco companies successfully opposed a tax increase for the sixth consecutive year using the routine “tax will fuel smuggling” scare tactic. Although tobacco related CSR activities are banned, BAT sponsored a bus that drove around Kuala Lumpur claiming it was, “Public awareness initiatives to educate the public on the tobacco black market and New Category products.” But this is a form of sponsorship and promotion which is banned. No action was taken against it for violating the law.
This year, BAT is gunning for a seventh year of no tax increase in the 2023 Budget, repeating the smuggling argument that “Any increase would further widen the price gap between legal and illegal cigarettes and drive more consumers to the tobacco black market.”
It is up to the government whether they want to allow themself to be persuaded to protect the tobacco industry’s profits or take action and step-up tobacco control to protect public health.