BAT jacks up purchases of tobacco leaves

AGOO, LA UNION—British American Tobacco’s Philippine unit has doubled its yearly purchase of local tobacco leaves to 3.6 million kilograms as the company strives for a firmer foothold in the domestic market.

James Lafferty, BAT Philippines general manager, said in an interview that the company had been taking steps toward previously announced expansion plans, starting with making good on its promise to increase local leaf procurement.

The leaves will be brought to Malaysia where BAT has a cigarette factory. Some of the products with Philippine input will be brought back to the local market.

Lafferty said the leaves would also be used for blending with produce from other areas, with the finished products to be sold in other markets.

He said this year’s purchases made BAT the biggest buyer of local leaves in relation to market share.

“We are only less than one percent of the market and yet we are buying almost 5 percent of the total projected harvest (for the 2012-2013 planting season),” Lafferty said.

In the Philippines, particularly in the Ilocos region, the single-cycle planting season starts in November or December. For a rain-averse crop such as tobacco, harvest comes around during the hottest months of the year.

“The excess Philippine tobacco leaves that we buy are being consumed all around the globe as I have pushed the company to use these for other markets,” Lafferty added.

BAT Philippines gets its entire supply of Philippine leaves from Universal Leaf Philippines Inc. (ULPI), which has a processing facility in this town.

ULPI, the biggest direct buyer of crops from growers, is an affiliate of Universal Corp. which is based in Richmond, Virginia in the United States.

Also, the BAT Philippines chief said the company was planning to invest at least $50 million in the domestic market this year, mainly to hire more employees and beef up its distribution and marketing network.

BAT Philippines has committed to lay out at least $200 million over a five-year period.

The company, which has re-established itself in the country after pulling out in 2009, is also introducing new variants of its products to expand its market share.

Lafferty said BAT would introduce in the next two weeks a menthol variant of its Lucky Strike brand called “Click & Roll Fresh.”