Annual Report 2009 - British American Tobacco

Strategic segment volume in 40 key markets
BILLIONS
2008
2009
177
ASU30
176
273
Lights
265
187
Premium
184
25
Menthol
26
Based on data from the 40 key markets, our share
in each segment in 2009 was ASU30 (24%),
Lights (25%), Premium (27%) and Menthol
(24%). These figures exclude acquisition volumes.
Global Drive Brand volume growth
BILLIONS
05 125
06 146
07 161
08 187
09 195
Since 2005, our four GDBs – Dunhill, Kent, Lucky
Strike and Pall Mall – have increased combined
volume by 56%.
GROWTH CONTINUED
Our approach to marketing
Our business is about offering adult consumers
high quality brands that they will choose
over competitors’ products. It is not about
boosting the number of smokers, increasing
the amount they smoke or targeting those
who are underage.
Our International Marketing Standards detail
our commitment to marketing appropriately
and only to adult consumers. The Standards
apply to our companies globally and govern
our tobacco marketing across all areas,
including print, billboards, electronic media,
promotional events and sponsorship.
A review of adherence to these Standards
was conducted by all Group companies in
2008. Although the assessment reported an
overall adherence rate of 97 per cent, it also
identified some areas where we were not yet
meeting our Standards. These were principally
related to inconsistencies in interpretation of
the Standards at a local level.
During 2009, we focused on action plans
to address these issues and progress was
monitored by our regional audit and corporate
social responsibility (CSR) committees, with
updates reported to our Board CSR Committee.
Actions taken have included issuing guidance
to clarify the sanctions that can be applied to
retailers found to have sold tobacco products
to those who are underage and training to
raise awareness of how our updated Standards
cover technological developments, such as
electronic and interactive displays in shops.
Full adherence to our International Marketing
Standards was achieved in all but 12 companies.
A total of 15 instances of non-adherence were
reported to have occurred. Action plans were
already in place by the end of 2009, with the
aim to achieve full adherence in 2010.
We are committed to bringing our recently
acquired business in Indonesia into line with
our global practices. However, our plans
to introduce our International Marketing
Standards have been overtaken by proposed
regulations from the Ministry of Health.
The market in 2009
2009 has been a difficult year for fast moving
consumer goods in general and tobacco
products did not escape the challenge.
The global economic recession has affected
the market to varying degrees in different
geographies. Total market volume declined
by around 2 per cent in our key markets, with
consumer down-trading moving some of this
volume into illicit trade.
Despite this, our overall performance has held
firm. We continued to invest in marketing
programmes and innovation throughout the
year. As a result, our overall volume share in
key markets was virtually unchanged. Our
Global Drive Brands (GDBs) – Dunhill, Kent,
Lucky Strike and Pall Mall – have grown by
a combined 4 per cent in volume and have
gained market share, helped by continued
organic volume growth. Our portfolio has
proved resilient in difficult times and, as
consumers come out of recession, we are
in an excellent position.
Balanced and innovative brand portfolio
Our GDBs cover the premium and valuefor-money
(VFM) segments and are at
the forefront of our successful innovations,
product refinements and our trade marketing
strategy. They account for 27 per cent of the
global volume sales of our total portfolio and
our overall brand mix is broadly balanced
between premium, mid-price and low-price.
14 British American Tobacco Annual Report 2009 Directors’ report: Business review