On a cold winter morning, British American Tobacco Zimbabwe (BAT) executives woke up to find an unlikely guest — a competitor’s billboard — outside its head office along the busy Simon Mazorodze road in the capital a week ago.
Naturally, a competitors’ billboard outside any company’s premises does not sit well with management.
The guest, a combination of steel and concrete, does not seem to be going anywhere anytime soon. Savanna Tobacco is perhaps BAT’s strongest competitor since it started doing business in Zimbabwe nearly half a century ago.
With the billboard feat, BAT, a real Goliath in the tobacco business, is being taunted with a different kind of sling by a little David in the market.
While the times could be different between the two market nemesis, the weapons of choice in the battle have been improvised a bit.
Savanna seems to have adopted legendary boxer Mohamed Ali’s infamous trash talking; psychologically taunting opponents with demeaning talk on the eve of a fight.
For instance, the billboard, which has an array of Savanna’s products — Pacific brand — has a provocative pay line which reads: “Not British. Not American. Zimbabwe’s finest cigarettes.”
The pay line is an apparent reference to BAT’s British parentage while the bit about being Zimbabwe’s finest cigarettes is seen as an attempt at playing loyalty mind games with the customer.
Savanna has been very aggressive in its marketing, preferring to offer the market what it needs at a penetrative price.
The company sells all its products at prices well below its competitors.
BAT on the other hand has either been slow to react to the market with regards to both the price and product or has been unwilling to play the price game. The company continues to price its product at a premium.
On the other hand, Savanna has been packaging loose cigarettes for the low-end of the market. This has been very popular in the high density markets where smokers are looking at value as compared to brand.
Even BAT’s other competitors such as Mega have such products for the low-end of the market.
The latest billboard spat between BAT and Savanna is a microcosm of an already raging marketing battle between the two companies.
A few moths ago, BAT engaged the Ministry of Health over what it viewed as misinterpretation of Statutory Instrument 264 of 2014.
BAT’s bone of contention was the ZRP’s enforcement of SI 264 (2002), which the company feels is wrong, a charge ZRP denied, vowing to continue enforcing the law.
BAT queried what the company viewed as wrongful application of the law on its imported Dunhill product, which does not bear Zimbabwean health warnings. Incidentally, all cigarette exports in South Africa are required by law to carry specifically South African health warnings.
According to SI 264 (2002), cigarette manufacturers have to use the mandatory Zimbabwean health warning which reads: “Danger: Smoking Is Harmful to Health.”
But BAT argues it was not necessary to have the Zimbabwean health warning, but an “appropriate” warning that serves the same purpose in line with the statutory instrument. BAT feels section 9 of SI 264 (2002) is not specific about the health warning imported brands must carry.
Section 9 of SI 264 2002 reads: “All imported tobacco products shall carry appropriate health messages in English.”
Retailers were a few months ago forced to stop the sale of BAT Zimbabwe’s imported Dunhill brand amid concerns the products were not compliant with the country’s laws.
This saw BAT’s Dunhill brand being taken off the shelves in major supermarket chains after it was found to be non-compliant with the SI 264 (2002). The Dunhill packs and dispensers carry South African health warnings, which are considered to be illegal under the instrument.
SI 264 (2002) governs the sale and marketing of tobacco and tobacco related products. Among other things, it outlines the rules and regulations guiding the sale of cigarettes, packaging required and health warnings. In an interview last week, BAT Zimbabwe MD Lovemore Manatsa conceded the operating environment was difficult.
“Our volumes as of May were flat versus the same period last year, but as we run now in the second half of the year we are just there above last year,” he said.
While BAT is a publicly listed company, its competitors are still private, and tend not to give information on how their products are faring in the market. After the bill board incident, smaller players say BAT is now flexing its muscle to compel formal outlets to remove Pacific brands from its dispensers in apparent retaliation to the billboard indiscretion.
BAT’s action also comes shortly after a somewhat low-key launch of a rebranded Madison, BAT’s flagship toasted brand. The brand competes directly with Savannna’s Pacific Storm, a toasted brand.
Traditionally, cigarette dispensers in key outlets like OK and TM are traditionally shared amongst all competitors, with the top shelves reserved for the owner and 30% allocated to competitors.
BAT’s move is likely to spark accusations of corporate bullying, as it flies in the face of established practice and may be interpreted as being anti-competitive.
Sources say the global multi-national is not pleased with the audacity of the Zimbabwean brand, and is flexing its muscle to bring it back into line.
Meanwhile, BAT recently launched a rebranded Madison pack to the high-density market, in a promotion that sold the new red pack as the new direction that Madison would be going.
The market’s reaction has been luke-warm, with consumers insisting on the old pack or defecting to lower-priced competitors like Pacific Flow-wrap packs.
In the Southern Region of the country, BAT has also re-released an old pre-1980’s brand, Ascot, to the same muted market response.