British American Tobacco p.l.c. is a global tobacco company headquartered in London, United Kingdom. It is the world’s second largest quoted tobacco company by global market share (after
Philip Morris InternationalPhilip Morris International is an international tobacco company, with products sold in over 160 countries. In 2007, it held a 15.6% share of the international cigarette market outside of the USA and reported revenues net of excise taxes of $22.8 billion and operating income of $8.9 billion.Until...
), with a leading position in more than 50 countries and a presence in more than 180 countries. Its brands include
DunhillDunhill cigarettes are a luxury brand of cigarettes made by the British American Tobacco company. They are usually priced above the average for cigarettes in the region where they are sold...
,
KentKent is a brand of cigarettes. Kent's Micronite filter was introduced shortly after the publication of a series of articles in Reader's Digest in 1952 entitled "Cancer by the Carton", that scared American consumers into seeking out a filter brand at a time when most brands were filterless...
,
Lucky StrikeLucky Strike is a brand of cigarette owned by the R.J. Reynolds Tobacco Company and British American Tobacco groups. Often referred to as "Luckies", Lucky Strike was the top selling cigarette in the United States during the 1930s.- History :...
and
Pall MallPall Mall cigarettes are a brand of cigarettes produced by R. J. Reynolds Tobacco Company in Winston-Salem, North Carolina, and internationally by British American Tobacco at multiple sites.- History :...
.
Its primary listing is on the
London Stock ExchangeThe London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
and it is a constituent of the
FTSE 100 IndexThe FTSE 100 Index, also called FTSE 100, FTSE, or, informally, the footsie , is a share index of the 100 most highly capitalised UK companies listed on the London Stock Exchange....
. It has a secondary listing on the Johannesburg Stock Exchange.
History
The company was formed in 1902, when the United Kingdom's Imperial Tobacco Company and the
American Tobacco CompanyThe American Tobacco Company was a tobacco company founded in 1890 by J. B. Duke through a merger between a number of U.S. tobacco manufacturers including Allen and Ginter and Goodwin & Company...
of the USA agreed to form a joint venture, the British-American Tobacco Company Ltd. The parent companies agreed not to trade in each other's domestic territory and to assign trademarks, export businesses and overseas subsidiaries to the joint venture. James 'Buck' Duke became its chairman and the British American Tobacco business began life in countries as diverse as Canada, China, Germany, South Africa, New Zealand and Australia, but not in the United Kingdom or USA.
In 1911 the American Tobacco Company sold its share of the company. Imperial Tobacco gradually reduced its shareholding, but it was not until 1980 that it divested its remaining interests in the company.
In 1976 the group companies were reorganised under a new holding company,
B.A.T Industries. In 1994 BAT acquired its former parent, American Tobacco Company (though reorganised after anti-trust proceedings). This brought the
Lucky StrikeLucky Strike is a brand of cigarette owned by the R.J. Reynolds Tobacco Company and British American Tobacco groups. Often referred to as "Luckies", Lucky Strike was the top selling cigarette in the United States during the 1930s.- History :...
and
Pall MallPall Mall cigarettes are a brand of cigarettes produced by R. J. Reynolds Tobacco Company in Winston-Salem, North Carolina, and internationally by British American Tobacco at multiple sites.- History :...
brands into BAT's portfolio.
In 1999 it merged with Rothmans International, which included a share in a factory in Burma. This made it the target of criticism from human rights groups. It sold its share of the factory on 6 November 2003 after an "exceptional request" from the British government.
In 2003, BAT acquired
Ente Tabacchi Italiani (ETI) S.p.A, Italy's state tobacco company. The important acquisition would elevate BAT to the number two position in Italy, the second largest tobacco market in the European Union. The scale of the enlarged operations would bring significant opportunities to compete and grow ETI's local brands and BAT's international brands.
In August 2003, BAT wins bid for a Serbian tobacco company (67.8% holding in the Serbian tobacco company
Duvanska Industrija Vranje (DIV)). The acquisition will allow local manufacture of the brands, freeing them from import duties. In the longer term, export opportunities are planned as neighbouring countries in south east Europe developed free trade agreements.
In January 2007, BAT closed its remaining UK production plant in
SouthamptonSouthampton is the largest city in the county of Hampshire on the south coast of England, and is situated south-west of London and north-west of Portsmouth. Southampton is a major port and the closest city to the New Forest...
with the loss of over 600 jobs. However, the global Research and Development operation and some financial functions will continue on the site.
In 2008 BAT acquired Turkey's state-owned cigarette maker
TekelTekel, is a Turkish tobacco company. It was nationalised in 1925 from a French company, the "Regie Compagnie interessee des tabacs de l'empire Ottoman". Tekel evolved into the sole manufacturer and distributor of all alcohol and tobacco products in Turkey...
. In July 2008, BAT acquired the cigarette and
snusSnus , or Swedish snuff, is a moist powder tobacco product originated from a variant of dry snuff in the early 19th century in Sweden, consumed by placing it under the lip for extended periods of time. The precursor of snus, the dry form of snuff inhaled through the nose, was introduced in Europe...
operations of the
Scandinavian Tobacco CompanyThe Scandinavian Tobacco Company , is one of Denmark's largest international companies. It was formed in 1961 by merging the cigarette manufacturing parts of C.W. Obels Tobaksfabrik, Chr. Augustinus Fabrikker and R...
.
In 2009 BAT acquired Indonesia's tobacco industry
Bentoel GroupPT Bentoel Internasional Investama Tbk. is an Indonesian tobacco company. In June 2009, British American Tobacco, the world's second largest tobacco company, acquired an 87% stake in Bentoel. In early 2010, the company became a member of BAT...
. BAT acquires Bentoel with the 85% stake.
In 2010,
Bentoel GroupPT Bentoel Internasional Investama Tbk. is an Indonesian tobacco company. In June 2009, British American Tobacco, the world's second largest tobacco company, acquired an 87% stake in Bentoel. In early 2010, the company became a member of BAT...
became a member of BAT.
Tobacco brands
International Brands include
DunhillDunhill cigarettes are a luxury brand of cigarettes made by the British American Tobacco company. They are usually priced above the average for cigarettes in the region where they are sold...
,
KentKent is a brand of cigarettes. Kent's Micronite filter was introduced shortly after the publication of a series of articles in Reader's Digest in 1952 entitled "Cancer by the Carton", that scared American consumers into seeking out a filter brand at a time when most brands were filterless...
,
Lucky StrikeLucky Strike is a brand of cigarette owned by the R.J. Reynolds Tobacco Company and British American Tobacco groups. Often referred to as "Luckies", Lucky Strike was the top selling cigarette in the United States during the 1930s.- History :...
,
Pall MallPall Mall cigarettes are a brand of cigarettes produced by R. J. Reynolds Tobacco Company in Winston-Salem, North Carolina, and internationally by British American Tobacco at multiple sites.- History :...
,
VogueVogue is a slightly upmarket brand of cigarette coming in several varieties, including regular, menthol and lights. Vogue cigarettes are marketed in both king size and super slim, which is about 100mm long and thinner than a standard size cigarette. The brand is owned by British American...
, Rothmans,
WinfieldWinfield is a brand of cigarette that is popular in Australia and New Zealand. They are also sold in other markets in Europe, Canada, South Africa and Asia...
,
State Express 555State Express 555 is a brand of cigarette manufactured by British American Tobacco. It was first launched in 1895 and is a very popular brand in Asia, especially China where it is BAT's most popular brand.-Sponsorship:...
,
KOOLKOOL is a brand of menthol cigarette currently produced by the R. J. Reynolds Tobacco Company, introduced in 1933, that has marketed itself towards the "sophisticated man". Originally introduced as an unfiltered "regular" size cigarette, filtered 85 mm king-size versions were later added to...
, and
ViceroyViceroy cigarettes are made by Brown & Williamson, which was owned by British American Tobacco, and, since 2004, by Reynolds American Inc., a joint venture between the U.S. branch of British American Tobacco and R.J. Reynolds Tobacco Company....
. However, British American Tobacco does not necessarily own the rights to all of these brands in every nation they are marketed.
Local brands owned by British American Tobacco include,Benson & Hedges (Bangladesh) Belmont (Colombia, Chile and Venezuela), Jockey Club (Argentina), Stradbroke (Australia), Hollywood (Brazil),
du Maurierdu Maurier is a Canadian-centric brand of cigarettes, produced by Imperial Tobacco Canada, a subsidiary of British American Tobacco. The brand is named after Sir Gerald du Maurier, a British actor and manager. The brand is also produced under license by the West Indian Tobacco Company in Trinidad...
(Canada),
PrincePrince is a cigarette brand owned by House of Prince A/S which is owned by Skandinavisk Tobakskompagni.Introduced 1957 by Chr. Augustinus Fabrikker in Denmark and today have approximately a 34% market share in Denmark...
(Denmark), North State (Finland),
HBHB, is a German cigarette brand whose initials stand for 'Haus Bergmann'.- General information :HB cigarettes belong to the ten top-selling brands in Germany with a market share of 3,5%. From 1959 - 1984, HB was the market leader among the German brands, 1975 even the market leader in entire Europe...
(Germany), Sopianae (Hungary), Wills (India), Ardath (Indonesia), Carrolls, Carrolls Kings, Grand Parade, Black Allen (Germany),
Sweet AftonSweet Afton are a brand of Irish cigarettes produced by P.J. Carroll & Co., Dundalk, Ireland, a subsidiary of British American Tobacco.-Cigarette:Sweet Afton are short, unfiltered cigarettes made with Virginia tobacco.-Brand History:...
, Major (Ireland), Boots, Alas (Mexico), Gold Leaf (Bangladesh, Pakistan), Jan III Sobieski (Poland), Yava Gold (Russia), Courtleigh (South Africa), Parisienne (Switzerland), Maltepe (Turkey) and Xon (Uzbekistan), Marlboro (Bangladesh)
Craven ACraven "A" is a brand of cigarette which were made in Canada, Jamaica, Vietnam, and North Korea. The cigarettes exhibit the English-style flavor of a Virginia-tobacco dominant blend, with that plant's attendant nutty sweetness. The cigarette was named after the third Earl of Craven in 1860.Craven...
(Vietnam and Jamaica) as well as BAT snus, Holiday, Freedom and Park Drive (New Zealand) Royals (UK), Embassy (Kenya), Viceroy, Newport, Lucky Strike in Dominican Republic and Delta in El Salvador.
On 11 June 2006, R. J. Reynolds Tobacco Company announced that it would be manufacturing Camel brand snus in Sweden in partnership with British American Tobacco; the product would be test-marketed in
Portland, OregonPortland is a city located in the Pacific Northwest, near the confluence of the Willamette and Columbia rivers in the U.S. state of Oregon. As of the 2010 Census, it had a population of 583,776, making it the 29th most populous city in the United States...
and
Austin, TexasAustin is the capital city of the U.S. state of :Texas and the seat of Travis County. Located in Central Texas on the eastern edge of the American Southwest, it is the fourth-largest city in Texas and the 14th most populous city in the United States. It was the third-fastest-growing large city in...
by the end of the month.
The
Bentoel GroupPT Bentoel Internasional Investama Tbk. is an Indonesian tobacco company. In June 2009, British American Tobacco, the world's second largest tobacco company, acquired an 87% stake in Bentoel. In early 2010, the company became a member of BAT...
products include Sejati, Star Mild, X Mild, and unO Mild.
Other operations
BAT has diversified into various fields at different times in its history. Its U.S. retail division, BATUS Retail Group, acquired
Gimbel'sGimbel Brothers was an American department store corporation from 1887 through the late 20th century. The store is known for creating the Gimbels Thanksgiving Day Parade, the oldest parade in the country. Gimbels was also once the largest department store chain in the country...
,
Kohl'sKohl's Corporation is an American department store chain headquartered in the Milwaukee suburb of Menomonee Falls, Wisconsin, operating , 1,089 stores in 49 states. In 1998, it entered the S&P 500 list, and is also listed in the Fortune 500...
, and
Saks Fifth AvenueSaks Fifth Avenue is a luxury American specialty store owned and operated by Saks Fifth Avenue Enterprises , a subsidiary of Saks Incorporated. It competes in the high-end specialty store market in the Upper East Side of Manhattan, i.e. 'the 3 B's' Bergdorf, Barneys, Bloomingdale's and Lord & Taylor...
in the 1970s and
Marshall Field'sMarshall Field & Company was a department store in Chicago, Illinois that grew to become a major chain before being acquired by Macy's Inc...
and its divisions in 1982. The United Kingdom retail chain
ArgosArgos is the largest general-goods retailer in the United Kingdom and Ireland with over 800 stores. It is unique amongst major retailers in the UK in that it is a catalogue merchant...
was purchased in 1979. Kohl's grocery stores were sold to
A&PThe Great Atlantic & Pacific Tea Company, better known as A&P, is a supermarket and liquor store chain in the United States. Its supermarkets, which are under six different banners, are found in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania. A&P's liquor stores, known as...
in 1983. In 1986, BATUS sold the Kohl's department stores and two Marshall Field's divisions,
The CrescentThe Crescent was a small chain of department store founded and based in Spokane, Washington. Once a subsidiary of Marshall Field & Company, the chain was sold to BATUS Retail Group in 1982. BATUS renamed the stores Frederick & Nelson, the company's Seattle, Washington division, in 1988. Frederick...
and
Frederick & NelsonFrederick & Nelson was a department store chain in the northwestern United States, based in Seattle, Washington. Founded in 1891 as a furniture store, it later expanded to sell other types of merchandise. The company was acquired by Marshall Field & Company in 1929...
; BATUS closed Gimbel's the same year, with many locations being absorbed by sister division Marshall Field's. In 1990 Marshall Field's was sold to Dayton Hudson Corporation (now
Target CorporationTarget Corporation, doing business as Target, is an American retailing company headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Walmart. The company is ranked at number 33 on the Fortune 500 and is a component of the Standard & Poor's...
),
Ivey'sIvey's , a former department store chain, was acquired by Dillard's, Inc. in 1990. Ivey's was based in Charlotte, North Carolina, and was founded in 1900 by Joseph Benjamin Ivey.-History:...
(another Marshall Field's division) was sold to
Dillard'sDillard's, Inc. is a department store chain in the United States, with 330 stores in 29 states. Headquartered in Little Rock, Arkansas, Dillard's locations are concentrated in Texas and Florida; with a major presence in other states including Arizona, Iowa, Colorado, Wyoming, Kansas, Missouri,...
, Saks Fifth Avenue was sold to
Investcorp S.A.Investcorp is a manager of alternative investment products, serving high-net-worth private and institutional clients. Its principal client base is in the six countries of the Gulf Co-operation Council, but it also has institutional clients in North America and Europe...
, and Argos was demerged (Argos was acquired by previous parent company GUS plc in 1998).
The group was a major financial services company with the acquisitions of
Eagle StarThe Eagle Star Insurance Company plc was a leading British insurance business. It underwrote the full range of risks, including fire, accident, marine, motor, life, contingency and Pluvius insurance...
(1984),
Allied DunbarAllied Dunbar was a large British assurance group. In its early years as Hambro Life Assurance it was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index...
(1985) and the
Farmers Group, Inc.The Farmers Insurance Group of Companies is a Swiss owned personal lines property and casualty insurance group providing homeowners insurance, auto insurance, life insurance, and financial services in the United States. It is the third largest insurance group in the US servicing over 10 million...
(1988). Around 1996 British American Tobacco merged their financial operations into a single operating unit, British American Financial Services (BAFS). This division was merged with Zurich Insurance Company in 1998 to form the
Zurich Financial Services GroupZurich Financial Services AG is a major financial services group based in Zurich, Switzerland.-History:The Company was founded in 1872 as subsidiary of the Schweiz Marine Insurance Company under the name Versicherung Verein...
. B.A.T still owns the minority interest in Zurich.
Advertising and promotion
BAT have found many imaginative ways over the years to keep its brands in the public eye. Indian Tobacco Company, in which BAT holds a minority share, as recently as 1996 secured an arrangement to sponsor the
Cricket World CupThe ICC Cricket World Cup is the premier international championship of men's One Day International cricket. The event is organised by the sport's governing body, the International Cricket Council , with preliminary qualification rounds leading up to a finals tournament which is held every four years...
which was branded the "Wills World Cup" and thereby achieved a high level of brand recognition for the Wills cigarette brand in India where young cricket fans were a key target market.
BAT also sponsor the London Symphony Orchestra.
Motor sport
The success of
Formula OneFormula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...
motor racing has largely been built on tobacco sponsorship, including that of BAT. In 1997 BAT brought its participation in the sport to new levels with the purchase of the
TyrrellThe Tyrrell Racing Organisation was an auto racing team and Formula One constructor founded by Ken Tyrrell which started racing in 1958 and started building its own cars in 1970. The team experienced its greatest success in the early 1970s, when it won three drivers' championships and one...
team for approximately £30 million. The team raced as Tyrrell for the 1998 season before being renamed as
British American RacingBritish American Racing was a Formula One constructor that competed in the sport from 1999 to 2005. BAR began by acquiring Tyrrell, and used Supertec engines for their first year...
(BAR). BAT used the team to advertise major brands, particularly Lucky Strike and State Express 555.
Although Formula One is an exceptionally expensive sport, for BAT the high cost of running an F1 team was justified as a promotional expense because there were few other opportunities for brand promotion. However in 2005 a European Union (EU) directive was brought into force which required national governments to legislate to prevent tobacco sponsorship. The livery of cars competing at circuits outside of EU jurisdiction can continue (in some cases) to promote tobacco brands but these opportunities are declining as anti-tobacco legislation begins to bite.
In 2004 BAR announced that technology partner
Hondais a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
had purchased a 45% stake and in September 2005 it announced that Honda would be buying the remaining 55% stake. The team raced as
Honda Racing F1 TeamHonda Racing F1 Team was a Formula One team run by Japanese car manufacturer Honda, from 1964 to 1968 and from 2006 to 2008. Honda's involvement in F1 began with the 1964 season; their withdrawal in 1968 was precipitated by the death of Honda driver Jo Schlesser during the 1968 French Grand Prix. ...
in 2006, the last year of the Lucky Strike sponsorship before leaving the sport. For the
2006 seasonThe 2006 Formula One season was the 57th season of FIA Formula One motor racing. It featured the 2006 FIA Formula One World Championship which began on March 12 and ended on October 22 after eighteen races. The Drivers' Championship was won by Fernando Alonso of Renault F1 for the second year in a...
, the team was renamed as Honda F1 Racing Team, with BAT only advertised at a couple of races. All links between the two companies were severed for
2007The 2007 Formula One season was the 58th season of FIA Formula One motor racing. It featured the 2007 FIA Formula One World Championship, which began on 18 March and ended on 21 October after seventeen events. The Drivers' Championship was won by Ferrari driver Kimi Räikkönen by one point at the...
.
Controversy
The Nigerian federal government filed a lawsuit against BAT and two other tobacco companies in 2007. Nigeria is seeking $42.4 billion, $34.4 billion of which the government seeks in anticipation of the future cost of treating Nigerians for tobacco-related illnesses. They are also seeking $1.04 billion as a fine for the companies' advertising and marketing campaign allegedly targeting Nigerian youth, and has asked the companies to fund an awareness campaign to educate young people about the dangers of their product. Several Nigerian state governments have filed similar petitions.
In 2008 the company was the subject of a BBC2 documentary, in which
Duncan BannatyneDuncan Walker Bannatyne, OBE is a Scottish entrepreneur, philanthropist and author. His business interests include hotels, health clubs, spas, media, TV, stage schools, property and transport. He is most famous for his appearance as a business angel on the BBC programme Dragons' Den...
investigated the marketing practices of the company in Africa and specifically the way the company targets younger Africans with branded music events, competitions and the sale of single cigarette sticks. Many of the practices uncovered by Bannatyne appeared to break BAT's own code of conduct and company standards. Towards the end of the programme, Bannatyne interviewed Dr Chris Proctor, Head of Science and Regulation, in which Proctor admitted that advertisements targeting children from three African countries were 'disappointing'.
In many of these undeveloped countries, the awareness of health risks from smoking is very low or nonexistent.
In 2001 September, BAT invested $7.1m in North Korean state-owned enterprise called the Korea Sogyong Trading Corporation, which employs 200 people in Pyongyang to produce up to two billion cigarettes a year. The operation is run by BAT's Singapore Division. Brands of cigarettes produced are Kumgansan, Craven A and Viceroy. BAT claims that the cigarettes are produced only for consumption in North Korea, although there are allegations that the cigarettes are smuggled for sale overseas.
British American Tobacco was declared the winner of the 2008
Roger AwardThe Roger Award For The Worst Transnational Corporation Operating in New Zealand is an annual media campaign run since 1997 by two activist organisations, Campaign Against Foreign Control of Aotearoa and GATT Watchdog...
, the award for the worst transnational corporation
operating in New Zealand.
British American Tobacco spent more than €700,000 lobbying the EU in 2008, up to four times as much as the company declared on the EU's register of interest representatives, according to a report by
Corporate Europe ObservatoryCorporate Europe Observatory , is a non-profit research and campaign group working to expose and challenge the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making...
. The
report argues that BAT's hidden lobbying activities, which are clearly not in the public interest, should be exposed to public scrutiny.
External links
- British American Tobacco
- Yahoo! – British American Tobacco plc Company Profile
- British American Tobacco plc historical stock chart
- BAT 'dragged out' of Burma; The Guardian; 7 November 2003
- George Monbiot
George Joshua Richard Monbiot is an English writer, known for his environmental and political activism. He lives in Machynlleth, Wales, writes a weekly column for The Guardian, and is the author of a number of books, including Captive State: The Corporate Takeover of Britain and Bring on the...
, The GuardianThe Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
, 23 August 2005, "Smoke and mirrors"