BAT Blames Poor Disposable Incomes For Reduced Smoking

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By Alois Vinga

LISTED cigarette maker, British American Tobacco (BAT) has blamed poor disposable incomes for the decline suffered in sales volumes across traditionally high performing brands.

In a trading update presented this week covering the quarter ended March 31, 2021, BAT chairman, Lovemore Manatsa attributed declines in volumes and the subsequent uptake of value for money brands to Covid-19 induced declining disposable incomes.

“The Aspirational brands, Dunhill Newbury and Dunhill Kingsgate volumes declined by 55% compared to the same period in prior year mainly because of reduced consumer disposable incomes hit by the Covid-19 pandemic.

“On the other hand, consumer uptake in The Value for Money brands, Madison and Everest moved up by 10% relative to the same period in prior year. The Low Value for Money brand, Ascot, declined by 43%,” he said.

However, despite the economic setbacks, the company’s total sales volumes for the period under review increased by 3% compared to the same period in prior year as consumers increased uptake in the Value for Money brands.

The company`s premium brand, Dunhill increased volume by 91% as it returned to the market in the final month of the first quarter.

BAT continued to face an adverse trading environment during the quarter ended 31 March 2021, primarily attributable to the impact of the Covid-19 pandemic and the national lockdown measures instituted to contain the spread of the pandemic.

As a result, this led to a decrease in activity across all sectors of the economy and depressed consumer spending.

The company continues to proactively review its business model and related strategies to ensure the long-term growth and sustainability of the business.

Net turnover, in hyper-inflation accounting terms increased by 75% compared to the same period in prior year driven by price increases as well as revenue generated from the export of cut-rag tobacco.

The company hopes that the current Covid-19 vaccination campaigns coupled with the positive impact of the recovering economy will lead to improved economic activity against the reduced need for further lockdowns.

Added Manatsa, “Zimbabwe’s reduced inflation rate since the month of February 2021 coupled with the continued access to foreign currency by companies from the weekly Foreign Currency Auction are reflective of the improving macro-economic factors.”