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Kumbirai Tarusarira
Zimbabwe Stock Exchange-listed entity British American Tobacco Zimbabwe (BAT) recorded an 18 percent decline in volumes for the nine months ended September 30, 2019 compared to the same period last year due to continued pressure on the consumers’ disposable incomes.
According to company secretary Pauline Kadembo, the operations were met with a number of challenges, which in turn likely contributed to constrained consumption;
“During the period under review, the operating environment remained challenging characterised by shortages of foreign currency, devaluation of the local currency, high inflation and persistent power outages,” said Kadembo.
BAT’s premium brand, Dunhill, which constituted 2 percent of the total volume, recorded a 92 percent decline. The decline was attributable to difficulty in importing the brand as the excise duty is payable in foreign currency.
Similarly, premium brands like, Newbury and Kingsgate, saw a single-digit decline of 3 percent compared to same period last year.
The Value for Money segment constituted by Everest and Madison went down by 17 percent whilst the Low Value for Money brand, Ascot, was 27 percent down compared to the same period prior year.
The cigarette excise regime was changed from a single specific excise regime to a mixed regime system specific rate and ad valorem.
Excise duty on cigarettes was increased to $100 per 1 000 sticks up from $50 for the same quantity.
The aforesaid challenges gave rise to depressed consumer uptake. Resultantly, the company implemented a pricing strategy aimed at mitigating cost pressures as well as protecting volumes.
Notwithstanding the fall in volumes, the company posted positives with regard to turnover for the period under review.
“Despite the decline in volume, the company recorded a growth in revenue and still remains profitable,” said Kadembo
Online Reporter