British American Tobacco investments hit $100M

MANILA, Philippines–The Philippine sales arm of the manufacturer of Lucky Strike and Pall Mall cigarettes has already infused half of its prior investment commitment worth $200 million, an executive said Tuesday.

James Michael Lafferty, British American Tobacco (BAT) country general manager, told reporters that the company has “crossed the $100-million mark” in terms of its investments in the country.

The amount was spent mainly in improving the distribution aspect of their business here.

“We’re still building our distribution network. In the convenience store chains that we’re in, we already have a 10-percent share. But we still need to penetrate the sari-sari stores,” he said.

In 2012, BAT announced it would pour $200 million into the country within a five-year period, following the government’s approval of the controversial Sin Tax Reform Law. Prior to the investment, the company pulled out of the Philippines in 2009, claiming that the domestic industry did not have a level playing field.

Lafferty, however, said they cannot commit to manufacturing in the country, as such would entail a certain scale or volume of demand feasible for domestic production. Overall, BAT has an only 1-percent share of the 100-billion stick tobacco market in the Philippines.

“Teams have come in to look at sites, but we need to still grow bigger,” he said. BAT products sold locally are imported from Malaysia and already enjoy zero tariff duties under the Asean Free Trade Area (Afta).

The executive said the company is open to “multiple, mutually beneficial” partnerships with its competitors, such as Mighty Corp., in terms of distribution or toll manufacturing. Mighty is now the second-largest tobacco manufacturer and seller in the country, just behind the local unit of global giant Philip Morris.

Lafferty is confident of increased sales of its brands Lucky Strike and Pall Mall.