eBusiness Weekly
BAT Zimbabwe in brief
Fradreck Gorwe
Zimbabwe Stock Exchange (ZSE) listing British American Tobacco Zimbabwe Holdings Limited (BATZ) has a history directly linked to the development of its significant global market.
BATZ manufactures, distributes and sells cigarettes and nicotine products. It also manufactures semi-processed tobacco for export through its Cut Rag production line.
The cigarette line comprise two brand categories, local and international. Brands overtly Zimbabwean include Madison, Newbury, Kingsgate, Everest and Berkeley.
Five major global brands comprise Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans.
The parent BAT plc was formed in 1902 as a joint venture between UK-based Imperial Tobacco and the American Tobacco Company of the United States. The company expanded globally to establish 50 factories across 41 countries.
BAT Zimbabwe was formed in 1920 and listed on the Zimbabwe Stock Exchange in 1959. A sister company Rothmans of Pall Mall (Zimbabwe) was formed in 1960 and listed on ZSE in 1961.
In 1999, the parent BAT plc merged with Rothmans International. Subsequent to the global merger, Rothmans of Pall Mall (Zimbabwe) sought authorisation from the Competition Commission to acquire the entire issued share capital of BAT Zimbabwe.
Consequentially, in 2000 BAT Zimbabwe merged with Rothmans of Pall Mall (Zimbabwe) to form BAT Zimbabwe Holdings.
Merged parties argued the market was no longer adequate for two separate tobacco companies.
The merged entity was supposed to sell through tender to a third party all the surplus cigarette making equipment.
Cut Rag Investments acquired the equipment with which it launched its Remington Gold brand in 2001.
The brand was later bought by Savanna Tobacco in 2016.
Operations from 2004 were subdued due to macro-economic challenges. Inflation had reached 586 percent by 2005.
The first quarter of 2009 resurrected growth prospects with the introduction of stable multiple currencies. This led to realisation of a sound 2010 trading year.
Investment in a new Cigarette maker and packer combination in 2011 resulted in enhanced product quality and production efficiencies. Gross Profit for the year accordingly grew by 163 percent.
In 2012, BAT Zimbabwe suffered accusations of industrial espionage by local competitors. This formed a connivance with excise duty increases and liquidity challenges to drive the agro-processor into hard times.
The company’s Strategic Portfolio of brands boosted with the 2017 acquisition of Reynolds America Inc which brought into the portfolio leading US brands of Camel, Newport and Natural American Spirit.
BAT Zimbabwe presently mulls reduced-risk tobacco products.
Most risks emanate from inhaling smoke produced by the burning of tobacco and so the company pivots towards nicotine alternatives such as e-cigarettes and heat-not-burn tobacco products.
A 2018 economic impact assessment study by research analysts, Econex, observed that BATZ contributed US$113,1 million in value added to the Zimbabwean agro-sector equating to 10,7 percent of the total value added. It is the largest contributor to excise tax accounting for 82 percent collections.
Meanwhile, the company has announced the resignation of Managing Director, Mrs Clara Mlambo effective June 30, 2019.
Shareholders have been advised of the ongoing process of recruiting a replacement.
