BAT Bangladesh Showed Strong Growth Despite Pandemic In 20212 min read
British American Tobacco Bangladesh, the largest cigarette company in Bangladesh has recently posted its annual report for the period of 2021. The company posted strong growth of 24.1% YoY growth despite the second and third wave of the coronavirus pandemic in 2021. Net revenue increased from Tk 60,290.6 Mn in 2020 to Tk 74,827.6 Mn in 2021. Profit increased by 37.5% YoY from Tk 10,886.8 Mn in 2020 to Tk 14,968.5 Mn in 2021.
Net Revenue of the company increased by Tk 14,536.9 Mn mainly due to higher domestic sales. Domestic sales increased by Tk 14,819.3 Mn in 2021 whereas export stick sales declined the most by Tk 259.2 Mn. Despite the pandemic, domestic sales volume increased by Tk 10,457.0 Mn from 52,543.0 Mn in 2020 to Tk 63,000.0 Mn in 2021. Domestic sales grew as illicit trade did not grow further due to pandemic-stricken supply chain issues and government initiatives.
In terms of volume contribution, low segment brands (Royals of London, Derby, Hollywood & Pilot) contributed to about 75% of the total volume whereas Premium, High & Medium brands (Benson & Hedges, John Player Gold Leaf, Star, Star Next & Lucky Strike) contributed to 25% of the total volume. In 2020, the low segment contributed to about 72% of the total volume, and Premium, High & Medium contributed to about 28% of the total volume.
Brand wise Overview
- Premium: Benson & Hedges posted 13% volume growth in 2021 compared to 2020. The growth in the premium segment is impressive considering the supply chain issues in the second and third phases of the pandemic in H1’21 and the price increase in H2’21.
- High: John Player Gold Leaf’s volume growth declined by 2% compared to 2020 mainly due to the 10% price increase in June 2021 fiscal budget. Both Gold leaf and Capstan suffered growth due to the price increase.
- Medium: Star’s volume declined by 6% in 2021 mainly due to accelerated down-trading due to affordability issues. Since the price increase of 31% in H2’21 of Star, the brand’s growth is suffering as the consumers probably opted for cheaper alternatives.
- Low: As noted above the low segment brand contributed to about 75% of the total volume sales in 2021. The low segment remains one of the most important segments for the company.
Domestic sales remain the main revenue segment with about 96.3% contribution to the total sales. However, the company is now focusing more and more on export opportunities of leaf sales and stick sales. Both the export segment showed de-growth compared to 2020 mainly due to supply chain issues and the company is hopeful of further growth from these segments. In April 2022, the company decided to invest another Tk 574 cr in its Savar operation with an eye on export opportunities.
“With an eye on future exports, the board has approved an investment of about Tk 574 crore to further expand the Savar factory’s production capacity,” said Sheikh Shabab Ahmed, head of external affairs at BAT Bangladesh.
The company also invested Tk 514 cr in the same factory back in 2021 to increase production capacity. For more updates, be with Markedium.