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The legal market for cigarettes had a positive evolution over the last two years, mostly due to the dramatic drop in the illicit trade, said Adrian Popa, Corporate & Regulatory Affairs Director of cigarette maker "British American Tobacco" (BAT) Romania.
In his opinion, "the most important factor which disrupts the cigarette market is the level of taxes, the excise in particular, which is disproportionately large compared to that of other countries which Romania shares 2,000 km of border with; this has the collateral effect of the smuggling of tobacco products coming in from the neighboring countries in question, such as Ukraine, Moldova and Serbia, where the price of a cigarette pack is far lower than it is in Romania". According to Mr. Popa, the steps to fight tax evasion which the state took over the last 12-14 months, proved effective, and he added that most of their effects are reflected in the market research which he periodically conducts.
The representative of BAT considers that the legislative predictability and the regulatory measures which are integrated in a plan and implemented based on a schedule are essential for the functioning of a healthy and stable business environment: "Just like any other business, the cigarette industry needs stability and the transparency of the legislative process".
BAT has a market share of 52% of the domestic tobacco market, according to the audit data for the month of January 2012, and has over 650 employees in Romania.
The brand portfolio of "British American Tobacco" Romania comprises "Dunhill", "Vogue", "Kent", "Lucky Strike", "Pall Mall", "Viceroy" and "Rothmans".
The "Kent Convertibles" brand has reached a market share of 1.4%, less than one year after its launch, Adrian Popa said.
In the first half of 2011, British American Tobacco (BAT) Romania saw an increase in profit, as a result of the decrease of tobacco smuggling at the time, of the increase in the price of cigarettes, of higher sales and of an improved product mix, according to the report published by the company on its website.
In Western Europe, a region which in the case of BAT also includes Romania, the company's profit has increased by over 8 million GBP, to 572 million pounds, especially due to strong results in Germany, Switzerland and Romania. The positive evolution in these countries was partially negated by the weaker earnings in Denmark, Italy and Spain, obtained in the first six months of 2011. The volume of sales in the region fell 2%, to 65 billion cigarettes.
The volume of sales of the four most important global brands owned by BAT - "Dunhill", "Kent", "Lucky Strike" and "Pall Mall" - increased by 11% on average. According to the report by BAT, sales of "Dunhill" cigarettes increased 1%, boosted by the positive evolution of sales in several countries, including Romania. The domestic market also contributed to the increase in the sales of "Kent" and "Pall Mall", by 16% and 14%, respectively.
On a group level, the profit of BAT climbed 20% YOY, in the first semester of 2011, from 1.66 billion sterling pounds to 2 billion sterling pounds. The turnover increased from 21.2 billion pounds to 22.28 billion pounds.
BAT does business in over 180 countries over the world.
Starting this year, BAT Romania has a new general manager, Gemma Webb, who took over from David Waterfield, who was the managing director for South-Eastern Europe for the last three years.
Gemma Webb joined the BAT team 11 years ago, holding the position of Trade Marketing & Distribution Manager for Western Europe. She later was a managing director for Great Britain and Ireland. "The stating of a clear vision, the setting of clear relationship rules, as well as a transparent decisional process are essential to successfully managing a business. Aside from these attributes, it also requires a little intuition, because there are many situations where the small details prove decisive", the new general manager of BAT in Romania considers.
In his opinion, "British American Tobacco" Romania has a solid market position and she emphasized that this is not the time for resting on its laurels: "We are focusing our business objectives on a consolidation of our position, a better resource management, as well as towards motivating our wonderful local team. Our company's main strength is the ability to build atop the specific elements of each country and I want to build on this advantage as much as possible".
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In 2010, BAT concluded a cooperation agreement with the European Commission and with the EU member states to fight illicit tobacco trade. Under that agreement, BAT will cooperate with the European Commission and with the law enforcement agencies in the EU member states. The agreement is looking to cooperate in several areas, and includes the funding of this initiative by the company by over 200 million dollars, (134 million Euros) over the next 20 years. "BAT is looking to support the governments of the EU member states in their fight against smuggling on an international level, because both the industry's legitimate interests, as well as those of the industry are currently seriously affected by illicit trade", Adrian Popa, Corporate & Regulatory Affairs Director told us last year, and he mentioned that the total losses suffered by the EU and the member states, following the illicit cigarette trade, amount to billions of Euros each year.
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