ZSE Listed Companies’ Profiles: British American Tobacco (BAT) Zimbabwe

Sector: Agricultural | Ticker: BAT.zw | Listing Status: Active | Share Price: ZWL(c) 22,000.00 | Market Cap: ZWL$4,593,373,740 | Updated: 20^th of Oct 2020

Article Also Includes Market Share

Background

Founded in 1960 and officially listed on the 1^st of January 1961, British American Tobacco (BAT) Zimbabwe Holdings Limited manufactures, distributes and sells tobacco products for local consumption through a network of independent retailers and distributors. Zimbabwe is the sixth largest tobacco grower in the world and the largest in Africa. Three types of tobacco are grown in the country; Virginia flue-cured, burley and oriental tobacco. Over 95% of Zimbabwe’s tobacco is flue-cured; and more than half of its production is exported to China. The company has recently adopted a mutually-beneficial contract system which is reaping rich rewards; the entire crop is bought from the farmer at the end of the season in return for a supply of seed and fertilizer, and expert training by an agronomist on agricultural techniques. Its head office is in Harare, Zimbabwe.

British American Tobacco is listed on the Zimbabwe Stock Exchange

Dominant Market Share

BATZ holds a dominant market share estimated at 73% of the Zimbabwean market. This is largely due to the prohibitive set-up costs of production, marketing and distribution functions. Smokers are notorious for their strong brand loyalties and new players would incur significant advertising costs.

Strong distribution network

BATZ has a strong countrywide distribution network operating out of five depots in Harare, Bulawayo, Gweru, Mutare and Masvingo, with outlying areas being serviced by third parties.

Nature of Business

BAT processes tobacco products mainly for the domestic market with exports being cut rag tobacco to Mozambique. The company manufactures approximately 1.8bn cigarettes. BATZ’s main competitor, Savvanna is the largest manufacturer of cigarettes although the bulk of its production is exported. The company markets both Global Drive Brands (e.g. Dunhill & Newbury) and local brands like Madison, Everest, Kingsgate and Berkleley. Madison is the flagship brand contributing about 67% of volumes.