BAT exports up 163%
RYAN CHIGOCHE
Listed cigarette manufacturer, British American Tobacco Zimbabwe (BAT)’s exports more than doubled in the three months to March 31, 2022 due to increased demand, the company’s board chairman, Lovemore Manatsa has said.
However, the local cigarette business was flat during the reviewed period.
“Export volumes of leaf and cut rag tobacco were up by 163% in the three months period under review compared to prior year due to increased demand of leaf from our export markets,” Manatsa said.
Strong exports, Manatsa said, covered for the poor cigarette performance in the local market.
The poor showing by the cigarette business in the local market was due to low consumer spending.
“The trading environment for the three months ended March 31,2022 was characterised by significant increase in inflation and exchange rate volatility. Additionally, the cigarette excise ad valorem regime was changed from 20% to 25% with effect from January 1, 2022. The challenging economic environment resulted in a decline in consumer spending.”
Manatsa said the company’s volumes from sale of cigarettes were relatively flat as compared to the same period last year on the backdrop of shrinkage of consumer disposable income.
He said the Lucky Strike and Madison, contributed 52% and 38% of the cigarettes volume performance respectively.
Apart from exporting, BAT manufactures, distributes and sells tobacco products for local consumption through a network of independent retailers and distributors.
According to the Tobacco Industry Marketing Board TIMB, Zimbabwe is processing +/-2% of the tobacco leaf produced into cigarettes and BAT is one of the few local producers.
While the tobacco industry has a potential value of US$15bn from cigarette export, only US$900m is currently being realised from leaf export.
More than half of Zimbabwe’s unprocessed tobacco is being exported to China and according to the TIMB there is a need for the country to maximise its tobacco potential and generate more foreign currency.
