BAT reports 16% slump in cigarette consumption

ZIMBABWE’S leading cigarette manufacturer British American Tobacco Zimbabwe (BAT) reported a 16% slump in domestic cigarette consumption in the first half of 2013 as the country suffered from a myriad of economic challenges.

Staff Writer

According to the company’s half year results statement for the period ended June 30, local cigarette sales volumes across all its brands except for the company’s more resilient market leader Madison brand declined significantly compared to last year.

“Industry cigarette volumes have reduced as a result of the slowdown in GDP (Gross Domestic Product) growth and the ongoing general affordability challenges that consumers in the country continue to face,” the company said in a statement attached to its interim financial results.

The economy was hard hit by a liquidity challenge that saw companies suffering, especially around the July 31 general election period.

“Successive increases in excise duty which impacted cigarette retail prices in 2011 and 2012 have been compounded by coinage constraints, resulting in consumers often paying higher than recommended by manufactures simply due to unavailability of coins,” added BAT.

Consumer Council of Zimbabwe executive director Rosemary Siyachitema is on record saying the lack of adequate change was pushing prices upwards and had become a national crisis that needed urgent attention.

Outside the country, BAT’s global brands Dunhill grew by 44% compared to last year, albeit off a small but growing consumer base.

The cigarette maker said although trading conditions were expected to remain challenging in the second half of the year as the country continued to look for stability, the company was confident its strategies remained appropriate and that its brand portfolio was relevant.

BAT said it remained committed to overcoming challenges presented by 2013 towards growth.

Its total revenues for the six months were flat at US$23,1 million due to what it said was a result of manufacturer increases net of excise duty on key brands in December 2012, which partly offset the impact of lower sales volumes.

Gross profit for the period increased by US$2,5 million to US$16 million, driven by strong management focus on cost reductions.
“Cut rag exports to Mozambique were discontinued whilst management focused the business on building distribution of the manufacturing cigarette portfolio,” BAT said.

 

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