Kenya: BAT Eyes Premium Smokers to Cut Reliance on Sportsman

Source from:  Business Daily Africa (The Nation) (ke)  05/07/2013

BAT Kenya will now focus on the high-end cigarette market with its premier Dunhill brand to drive growth. The firm sold more than five billion cigarette sticks last year, with its flagship Sportsman brand accounting for more than half of total sale volumes.

But BAT is turning to Dunhill, which grew 10 per cent last year, to cut reliance on Sportsman and in line with its global strategy to lift unit sales of four brands, which also includes Kent, Lucky Strike and Pall Mall.
 
"We want to grow the Dunhill brand in this market," said outgoing BAT Kenya managing director Gary Fagan.

"To further strengthen the brand, we are focused on growing the distribution footprint and innovate on packaging. We launched Dunhill Switch, marking a major innovation milestone in the domestic tobacco industry."

The cigarette maker is counting on the premium brand, whose retail price is 47 per cent higher than Sportsman, to grow sales. A packet of Dunhill retails at Sh140 while Sportsman goes for Sh95.

Last year, BAT Kenya net sales dropped 3.4 per cent to Sh19.4 billion, hurt by higher taxes, but profits grew six per cent to Sh3.27 billion.
 
The firm's other premium products include Benson & Hedges and Embassy, which retail at an average of Sh140 per pack. Dunhill was introduced in Kenya in 2005.

BAT's mid-tier brands include Pall Mall and SM while it feeds the low end with Safari and Rooster that retail at Sh60 a packet. The high-end market also offers BAT favourable ground for growth given that its lacks competition similar to what it's facing in other segments of the market.
 
The firm has been locked in a two-decade old rivalry with Mastermind Tobacco over the control of raw materials and the market. This has seen Mastermind grab market share with its flagship brand Supermatch, with pricing being its key market driver.
 
The firm has since 2009 maintained the trend of sharing the entire earnings with shareholders as dividends — which rose to a record Sh32.50; up from Sh30.50 it paid the previous year.

This has made BAT one of the most sought after counters at the Nairobi bourse with its share gaining 68 per cent over the past year to Sh545 a piece. Enditem