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The South African arm of British American Tobacco (BAT) is looking to restructure the business, a process that may affect about 200 jobs, following a further decline in its cigarette sales in the country, it said on 23 January.
The Dunhill and Peter Stuyvesant cigarette maker said the drop in cigarette sales in South Africa was almost entirely due to the growth of the illicit cigarette trade.
Lockdown ban left a heavy dent
South Africa’s “unconstitutional ban” on cigarette sales implemented during the national Covid-19 lockdown in 2020 also contributed, a company spokesperson said.
“The 2020 tobacco sales ban resulted in an explosion of growth for the illicit market. This has continued even after the ban on tobacco sales was lifted,” the company said in a statement.
During the lockdown, essential services retailers and petrol station forecourt stores were not allowed to sell alcohol or cigarettes.
Rampant illicit trade
BAT did not give details of how it would restructure its business or which jobs might be cut.
In 2019, BAT South Africa permanently employed around 1,800 staff across its South African operations. Since 2020, it has been forced to retrench more than 30% of its workforce, the company said.
Over the same period, the company’s cigarette sales dropped by around 40% as the illicit market accelerated, it said.
Based on independent studies, BAT South Africa estimates that the illicit cigarette trade accounts for up to 70% of South Africa’s total cigarette market.
As a result, the company has begun a consultation process with staff around restructuring the business and “it is expected that around 200 company jobs may be affected by the proposed restructure,” the company said.
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CTO appointed
Globally, British American Tobacco said on 31 January that it will create two new board roles and a regional structure to streamline and accelerate its business transformation.
The London-listed tobacco company said Johan Vandermeulen will be appointed Chief Transformation Officer and be responsible for driving faster transformation, accelerating greater capability build in key areas and enabling an even faster, simpler and more agile organization.
Vandermeulen is currently regional director, Europe.
Luciano Comin will be appointed to the new role of Director: Combustibles, and will be in charge of driving value from combustibles to fuel further investment in new categories, the company said. Comin was Regional Director: Americas & Sub-Saharan Africa, and before this held senior general and marketing management positions in Europe, Mexico and Malaysia.
Following its strategic review, the company will reduce the number of regions to three from four and include USA, American & Europe, and Asia Pacific, Middle East & Africa.
“The changes we have announced today will drive increased focus, accelerate our transformation and fuel growth as we strengthen the foundations of our future as a category-led enterprise,” CEO Jack Bowles said.
