BAT draws on massive Third World craving

TOM STEVENSON

City Editor

British tobacco companies are still raking in enormous profits thanks to the insatiable demand for western cigarettes around the developing world. Figures from British American Tobacco (BAT), one of the UK's largest companies, confirmed that countries such as India, China and the former Soviet Union cannot get enough of the weed that the West is increasingly giving up.

Sales of brands like Benson & Hedges, Silk Cut and Lucky Strike soared 18 per cent last year, with BAT selling a total of 670 billion cigarettes in almost every country in the world. That was 100 billion more than in 1994, taking BAT's share of the world tobacco market up to 12.4 per cent.

Global sales of cigarettes reached 5,422 billion sticks in 1995, representing a pack a week for every man, woman and child in the world. Far from reducing over the past 15 years cigarette consumption has actually risen by more than one-quarter since 1980. Industry sources estimate that sales are growing annually by about 1 per cent.

BAT, and other British companies such as Imperial Tobacco, which is owned by the giant Hanson conglomerate, are cashing in on that growth. The group's exports last year increased by 11 per cent and it now sells 250 brands, manufacturing in over 50 countries and owning the top-selling brand in 30 markets.

Consumption is dominated by markets which until recently have been closed to outsiders, including traditionally large consumers such as Japan, which has only just dropped the monopoly enjoyed by its state-run cigarette manufacturer.

BAT yesterday reported a 54 per cent rise in tobacco profits. Last year it made pounds 1, 561m from cigarette sales, dwarfing the pounds 1,052m it made from its insurance interests, Eagle Star and Allied Dunbar.

The biggest market of all is China, which experts believe accounts for one-quarter of all the cigarettes smoked in the world. BAT's Southampton- made brand State Express 555 is one of the most popular brands there. Demand is so great that the company has had to expandof its south-coast manufacturing facilities.

The other prize for western cigarette companies lies in the former Eastern Bloc market. BAT already owns Hungary's best-selling brand, Sopianae, and recently started from scratch one of Poland's fastest growing labels, Jan III Sobieski. Sportsman sells well in Kenya and Uganda, while Scissors is India's most popular brand.

BAT results, page 19