The popularity of brands such as cigarette-store.biz/online/lucky-strike and cigarette-store.biz/online/pall-mall continues to boost sales at British American Tobacco, although the company said that a shrinking tobacco market and cash-strapped consumers were denting cigarette volumes.
“Our consumers are finding economic conditions difficult and volumes suffered as a result of market size declines,” said Paul Adams, chief executive of British American Tobacco.
“However, there was continued pricing momentum and good growth in market shares, leading to solid revenue growth. We remain on track for the year.”
Sales volumes of Lucky Strike grew by 8 per cent in the three months to the end of March, whilst Pall Mall grew by 10 per cent. The Dunhill brand increased volumes by 24 per cent, after BAT changed the brand of its Carlton cigarettes in Brazil to “Carlton by Dunhill”.
In the three months to the end of March, revenues in constant currencies grew, helped by the acquisition last year of the Indonesian tobacco group Bentoel Internasional Investama, although BAT declined to give figures for the increase in turnover.
However, in spite of this sales growth and the gains made in its major brands, total cigarette volumes fell in the period, with organic volumes down 4 per cent, whilst volumes from BAT’s subsidiaries down by 1 per cent.
BAT attributed some of the decline in volumes to a reduction in the size of the overall tobacco market, with total tobacco consumption falling fastest in the markets of Brazil, Japan, Ukraine and Romania.
Notwithstanding a reduction in the size of the Japanese tobacco market, Asia Pacific was the only region in the world where BAT increased its sales volumes, with the group selling 45bn cigarettes, up 5 per cent on the same period last year. The region now accounts for 25 per cent of sales volumes.
In eastern Europe, however, sales volumes fell 7 per cent to 25bn cigarettes, with volumes also falling in western Europe, Africa, and the Middle East, although stable in the Americas.
Shares in British American Tobacco fell 14½p to £21.26 on Wednesday.
By John O’Doherty
Ft, April 28 2010