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British American Tobacco South Africa: A consumer driven brand

British American Tobacco South Africa: A consumer driven brand

Ever since the first commercial cigarettes was made in 1865 in the US, many iconic moments in cinema were defined by the way the actors used the cigarette as a prop. From Clint Eastwood in the Good, the Bad and the Ugly to Humprey Bogart in Casablanca.

In the movies, a cigarette was never just a cigarette. It was used as a prop representing the glamour and chic of the era. Bad guys smoked heavily in the movies. The good guys and gals held the cigarette in a confident manner, puffing elegantly and spitting out iconic lines that defined the period.

The fortunes of the tobacco industry may have changed over the years, but British American Tobacco (BAT) South Africa prides itself on staying ahead of consumer trends. Soraya Benchikh, CEO of BAT South Africa says that the consumers drive everything that they do at BAT. “We invest effort and care in understanding their preferences. We believe that adult consumers make informed choices about smoking and about their brand preferences. Nationally, we offer a diversified portfolio with a brand for every taste” she said.

 

The story behind the iconic cigarette brands

The global merger of Rothmans International with British American Tobacco in 1999 created the business as it is known today – and led to the creation of British American Tobacco South Africa. In 1904, United Tobacco Company was formed in the US. The Heidelberg Factory was established in South Africa in 1976, as a social upliftment project in an area with low economic growth. South Africa is also home to the eighth largest British American Tobacco factory globally.

The factory is the eighth largest BAT factory in the world. They are the largest employer in the Heidelberg area, and the factory produces over 27 billion cigarettes a year for local and export markets, as well as processed leaf tobacco for export purposes.

BAT South Africa has a portfolio of more than 20 brands and are home to most of the country’s top selling brands. The market consists of over 8 million smokers.

Dunhill- Launched in 1907, Dunhill cigarettes are sold in 120 countries. It is a strong Premium Brand which offers a diverse range of Premium and Super Premium cigarettes.

Peter Stuyvesant –First launched in South Africa in 1954 and then internationally in 1957, Peter Stuyvesant is sold in around 30 countries around the world.

Kent- Kent was launched in the South African market in November 2006. Kent is a modern freestanding Premium Brand, consistently perceived as delivering ‘the modern way to smoke’.

Pall Mall- First introduced in 1899, Pall Mall has undergone many changes and is now their leading global Value-for-Money Brand.

Benson & Hedges- Benson & Hedges or B&H was re-launched in South Africa during 2014, following strong consumer demand.

 

Setting the benchmark for compliant marketing principles in the tobacco industry

A criticism often directed to the tobacco industry, is that they direct their marketing to the youth. BAT South Africa has made a serious commitment to never aim their marketing at anyone younger than 18 years. In addition, they have committed to never persuading adults to begin or continue smoking. They believe that consumers are entitled to have relevant information about the tobacco products available to them.

Their marketing practices are compliant with local legislation and regulations in South Africa, and are also aligned with the British American Tobacco Group’s global International Marketing Principles. These principles have set a benchmark for the whole tobacco industry.

Stimulating economic activity through the BAT South Africa value

BAT South Africa relies on over 179,000 outlets across the country to sell its products directly to consumers.  They have a significant impact on employment in the sector, accounting for 19,145 jobs through their retail partners. The majority of these businesses are small, independent, black-owned, and derive substantial income from of the retail sale of tobacco products.

They directly employ more than 2,100 people creating much needed economic upliftment in the Heidelberg area. They purchased goods and services worth over R6 billion from local suppliers, creating more jobs downstream. A study has shown that BAT South Africa buys over 90% of all tobacco leaf grown in South Africa. The impact on the agriculture sector amounts to 1,717 full-time equivalent tobacco farming jobs.

 

Transforming the tobacco leaf growing sector

BAT South Africa supports several projects that focus on providing support to emerging black farmers to achieve economic success. The Sun- Cured Virginia Leaf Project was established in 2011 to train previously disadvantaged individuals to grow sun-cured Virginia tobacco and other sustainable crops commercially.

They are committed to sustainable agriculture and the transformation of the tobacco leaf growing sector. In partnership with its local leaf suppliers, the project has helped establish 87 farmers, who between them cultivate 94 hectares of tobacco crop and produce more than 150 tons of leaf each year. In addition, these farmers produce almost 100 hectares of mixed crop.

BAT South Africa acts as an incubation partner, providing emerging black farmers with development funding to kick-start farming activities, while Limpopo Tobacco Processors (the company’s main local leaf supplier) provides crop loans and then purchases and processes all the leaf grown. This is supported by Universal Leaf SA, which provides technical support. In addition, BAT South Africa has contracted Mobile Agri Skills Development and Training (MASDT) to provide training, incubation, mentoring and administrative services to support tobacco growing, as well as the cultivation of other crops and livestock management.

Over the last decade, BAT South Africa has invested over R280 million in programmes centred on three themes – empowerment, civic life and sustainable agriculture. Since 2015, these programmes have been delivered through a charitable foundation called the Signature Trust.

Broad Based Black Economic Empowerment

The ownership of BAT South Africa has been structured to meet the country’s transformation targets and 39.88% of the economic interests of BAT South Africa are owned by black people, with 20.03% in the hands of black women, exceeding the targets set.  BAT uses its procurement spend to empower B-BBEE recognised suppliers and they benefited from R2.59 billion (42.7%) of its total procurement spending in 2015. In addition, 43.22% of all suppliers were majority black-owned.

R161 million was spent on skills development and learning programmes for black people which benefited 782 black people who participated in workplace learning programmes like learnerships, apprenticeships and internships at the company. Aside from providing bursaries to needy learners to further their tertiary education, BAT South Africa have also partnered with Sedibeng College which is located near their Heidelberg facility. The college learners benefit from placement opportunities, which allow them to gain valuable work experience.

 

Working actively to reduce their impact on the environment

Most of the products that go into cigarettes are sourced from the natural environment. The sustainability of these resources is key for the company as well as looking at measures to reduce the impact of their manufacturing processes.  Benchikh said that the company recognised the importance of applying sound environmental practises throughout their operations.

Their Heidelberg facility contributes the most to their environmental footprint and they have invested in several initiatives to reduce their energy and water consumption.

Great people and an engaging work culture

Employees say that they are ‘lekker’ company to work for. The word is colloquial for all things nice and pleasurable.  Their reputation as a Top Employer is evidence that they are an employer of choice and can attract the best talent both locally and internationally.

Benchikh believes that BAT South Africa offers an inspiring, challenging and diverse place to work, with great people and an engaging culture which is key to delivering their strategy. There is a constant focus on driving high performance and at the same time creating and engaging culture where employees and work teams can be successful.

Through various development programmes they focus on developing the next generation of leaders and encourage and reward entrepreneurial behaviour.  In the spirit of the Rainbow Nation, they value the diversity of their workforce and provide a safe place to work, protecting their employees’ well-being and valuing their views and opinions.

 

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