Cigarette Smoking Goes Down in Zimbabwe: British American Tobacco

Cigarette producer, the British American Tobacco (BAT) has reported a 17% decrease in the total sales comparing to 2018 according to the group’s Abridged Audited Financial Results for the Year Ended 31 December 2019.

The company’s Chairman Lovemore Manatsa attributed such decreases to importation challenges and shrinking consumer disposable income.

“In the Aspirational Premium segment, Newbury, grew by 12% driven by consumers switching from Dunhill due to our inability to import the product as duties were required to be paid in United States dollars. Consequently, Dunhill sales declined by 94%,” Manatsa says.

“The Value for Money segment, (Madison and Everest) and Low Value for Money brand, Ascot, recorded a 17% and 18% decline respectively driven by shrinking consumer disposable incomes. However, the Company preserved margins over the reporting period through a balanced pricing strategy.”

BAT also reported of operating profit decreasing by ZW$162.1 million (104%) in versus the same period in 2018, to close at a loss of ZW$5.8 million in 2019.

“Gross profit decreased by ZW$16.4 million (7%) compared to 2018, driven by an increase in raw material costs and costs associated with the use of generators due to power interruptions during the year in our manufacturing activities,” Manatsa says.

“Revenue decreased by ZW$16 million (5%) on an inflation adjusted basis when compared to 2018, driven by declining sales offset by numerous price increases.”

“Selling and marketing costs decreased by ZW$10.5 million (27%) compared to 2018 driven by route to market initiatives to manage the Company’s distribution costs,” went on the chairman.

Devaluation of the local currency in 2019 against major trading currencies further impacted consumer disposable incomes according to the BAT chairman

“Inflation increased to 521% by the end of December 2019 against 42.1% in December 2018. This increase depicted the worst annual outturn in eleven years and triggered a return to hyperinflation in the Zimbabwean economy,” Manatsa says.

“Power shortages persisted resulting in heavy reliance on generators which largely contributed to decreased productivity and increased operating costs for the Company.”