BAT allots $50 M to rebuild Phl operations

AGOO, La Union, Philippines – Global tobacco giant British American Tobacco, a new player in the $4 billion Philippine tobacco industry, is spending more than $50 million this year out of its  planned  $200 million  five-year capital spending program to rebuild operations in the country.

BAT Philippines general manager James Lafferty said the London-based company  which carries  popular selling brands Lucky Strike, Dunhill, Kent and Pall Mall,  is reviving its presence in the Philippine market, currently dominated by local tobacco giants Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco.

BAT pulled out of the Philippines in 2009 after failing to get the same tax treatment as the existing cigarette brands in the country.

“We’re investing in excess of $50 million this year.  The original commitment is $200 million over five years.  We might even spend more than that as we make our presence felt in the Philippines,” Lafferty said.

Lafferty said the bulk of the $50 million will go to hiring more people to add to its existing manpower of 300. “We’ll be hiring people across the country, and in huge quantities. Thats how bullish we are on the Philippines,” he said.

As proof of its commitment to the Philippine tobacco market, BAT has doubled the number of tobacco leaves procured from local farmers or from Universal Leaf Phils. Inc. to 3.6 million, valued at around $12 million to $16 million.

BAT intends to buy another 3.6 million tobacco leaves next year as it further expands its operations here.  The purchase is equivalent to nearly five percent of the total projected harvest.

Lafferty led BAT’s Leaf Sourcing Team, which included officials from its affiliate companies in Malaysia, on an inspection of tobacco leaves sources in the northern province of La Union. The team conducted an assessment of pre-trial grades of tobacco leaves, smoke evaluation tests, and inspected the green components of the facilities.

In its bid to capture a bigger slice of the Philippine market, BAT will launch in the next two weeks an innovative new concept in cigarettes called Lucky Strike Click & Roll.  To be retailed at a little over P40, the new offering contains a menthol capsule in the filter that allows the smoker to choose the flavor of the cigarette before lighting up.

This new kind of cigarette, Lafferty said, changes from regular to menthol at the smoker’s whim. This means customers can enjoy the classic Lucky Strike taste experience or opt for menthol flavor.

The Philippines will be the first launch pad for BAT’s Click & Roll’s in Asia, Lafferty said.

Manufacturers have previously launched cigarettes with capsule technology in the UK and several Europeans markets. 

Lafferty said that while the company’s market share remains under one percent, volumes have improved. “Our business is growing each month.  We’re pleased with our progress but we’re still a baby tobacco company.  We just started in January,” he said.