Business that makes a 1.2bn packet

Despite the changes in its financial services business, the focus for BAT Industries remains tobacco. Trading profit in 1994 topped 1.2bn – it is expected to hit 1.5bn this year – and its importance has been underlined by a worldwide restructure which creates a single company to manage all its tobacco interests – British-American Tobacco (Holdings).

The move unites the four tobacco companies within the group: Brown & Williamson in the US, Brazil’s Souza Cruz, BAT (Germany) and BATCo which covers all other operations. The restructure sees Jimmi Rembiszewski, currently BATCo marketing director, take overall charge of BAT’s worldwide tobacco interests in the new company. Speculation that he will play an important marketing role in a combined financial services unit now seems unlikely.

BAT holds more than ten per cent of the world’s cigarette market, which remains its most profitable activity through international brands like Lucky Strike, Pall Mall, Benson & Hedges, Silk Cut and State 555. Its highly controversial $1bn (660m) takeover of the American Tobacco Company last year emphasised its continuing strategy to develop its tobacco business.

Sales of the international brands grew eight per cent last year with Eastern Europe, the Pacific Rim and Asia all showing growth. But BAT’s optimism about future tobacco sales could be dampened by the threat of legislative restrictions in Europe and especially in the US, where President Bill Clinton has embarked on a crusade against under-age smoking.

“The old structure was a hangover from when tobacco was a cash cow and BAT had regional groups responsible for developing other business areas,” says a BAT spokesman. “The changes reflect the belief that tobacco is a growth area again and BAT does not need all those regional groups when it is concentrating on financial services and tobacco.

“It recognises the change from being a production-led company to a marketing-led one with a more conventional fmcg structure. It also reflects the growing emphasis on international brands and exports.”

Ulrich Herter, group managing director Tobacco BAT Industries, becomes managing director of the new BAT (Holdings). All the appointments take effect in January.

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