Pakistan Tobacco Company

Introduction
Pakistan Tobacco Company Limited was incorporated in 1947 immediately after partition, when it took over the business of the Imperial Tobacco Company of India which had been operational in the subcontinent since 1905.

PTC is the part of the trans-national British American Tobacco Group (BAT), one of the world's most international business groups. In more than 100 years of British American Tobacco’s existence, the Group of companies has traded through the turbulence of wars, revolutions and nationalizations - as well as all the controversy surrounding smoking.

PTC brands, whether international, regional or local, are what drive British American Tobacco. The maxim of British American Tobacco founder Buck Duke - "Develop a superior product" - is as relevant today as it was then. BAT employs some 90,000 people worldwide and which has a presence in 180 countries. British American Tobacco has a position of market leader in more than 50 countries selling over 300 brands there. In 2004, the Group sold and produced a nearly 16% share of the global market of cigarettes.

PTC is the largest excise tax generator in the private sector in the country. In 2004 alone, PTC paid the government close to Rs.16 Billion in excise and sales taxes. This amounts to over Rs. 50 million per working day. Over one million people are economically dependent on the industry in Pakistan.
PTC strategy reflects their vision - being the champions of growth, productivity, responsibility and the winning organization. PTC work to ensure that they deploy their resources and capabilities in the most efficient way. Insisting on capital effectiveness, and growth they utilize their assets to the maximum. PTC is determined to become an organization with a focused, energized, and diverse talent-pool, achieving sustainable high performance thus translating into their ‘‘Winning
Culture’’.
Their brands encompass their values and they boast a diversified portfolio catering to the different tastes and preferences of the entire tobacco market. By offering products that are superior in quality, driven by global standards, PTC meet and exceed the expectations of their consumers. They believe that products that pose risks to health, such as tobacco, require regulation. They seek to engage with governments, regulatory bodies and other tobacco companies on tobacco regulation that can tackle real issues in workable ways. They are committed to working with national governments and relevant multilateral organizations, to reduce the health impact of smoking, and welcome opportunities to participate, in good faith, to achieve real progress. Following the ratification of the Framework Convention on Tobacco Control by the Government of Pakistan, they are working with the Government and local regulatory bodies to illustrate their dedication towards the responsible marketing of their brands.

PTC’s Environment Health Safety Program is designed to provide a safe workplace for employees, protect the environment, prevent damage to property, enhance employee morale, and assure compliance with applicable laws and regulations worldwide. Today, society also expects companies to work towards broader goals beyond the benefit of shareholders and to demonstrate support for communities, high standards of ethical behaviour and greater transparency and accountability. As society’s expectations of corporate responsibility change, they are also changing some of the ways addressing the issues of concern.

History

Pakistan Tobacco Company was being the first multinational to set up its business in Pakistan in 1947 and beginning operations out of a warehouse near Karachi Port, they have come a long way.
From being just a single factory operation to a company which is involved in every aspect of cigarette production, from tobacco cultivation to packaging we have evolved and grown with Pakistan. However, what is significant about these fifty-seven years is the effort that PTC has demonstrated in the development of the country. By being instrumental in the campaign for modern agricultural and industrial practices, they have helped in the development and progress of the agricultural & industrial sector in the country.
They have been supporting & contributing to various causes of national interest. Educating growers in the latest techniques and technology in agriculture, a forestation and free health care in designated areas are but a few examples.
Through these fifty-seven years, their continuous investment in people, brands, technology, innovation and the communities in which they operate has borne fruit in many ways and to mention just a few; they are deemed as a partner of choice by many, our Environmental, Health & Safety standards are a source of inspiration for local companies, their Industrial Relations practices have led and influenced local practices, and as a result of all these, their managers are highly valued and sought after people in the Pakistani corporate world based on the training and exposure they give them from very early on in their careers.

Awards
• Regional Legacy Award
• BAT Global EH&S Award
• BAT Zero Accident Award
• Supply Chain Global Award by Supply Chain
Council, USA.
• 2006 Environment Excellence by Ministry of
Environment Governtment of Pakistan.
• Best Corporate Report in the miscellaneous category by Joint Committee of ICMAP & ICAP.
• ISO 9001 & 14001 Certification
• SA – 8000 Certification
• MRP II Class ‘A’ Certification
History of Tobacco
Before going forward first we should know what is the history of tobacco, where it came from, why a cigarette exits etc.

Tobacco has been smoked for at least the last three thousand years. Christopher Columbus found it when he landed in the Americas in 1492, but ancient temple carvings show tobacco being smoked in Central America as long ago as 1,000 BC.
Ever since it arrived in Europe since the late 15th century, tobacco has divided opinion, sparked controversy, and generated substantial revenue through tax. Not long after it reached Europe, it was being described in terms ranging from "vile custom of manifold abuses" and "feast for the fiend" to "the divine herb" and "cornucopia of all earthly pleasure". Tobacco has periodically been subject to royal disapprovals, the whims of fashionable use, medicinal studies, smuggling, trade disputes, and bans.
In this section we offer a brief snapshot of the long and fascinating history of this enduring product, smoked by roughly one billion adult consumers around the world today. Early tobacco use
1,000 BC
Ancient temple carvings depict Mayan priests in Central America smoking tobacco through a pipe. Tobacco leaves become widespread in medicine for use on wounds as a means of reducing pain. Later the Aztecs incorporate smoke inhalation into religious rituals.

Two castes of smokers emerge: the pipe smokers at the court of Montezuma and lesser Aztecs who roll the leaves into crude cigars.
470 - 630 AD
Mayan tribes begin to scatter – and tobacco travels with them. The leaf moves southwards to South America where it is wrapped in maize and palm leaves and smoked – and north where it is introduced to the native Americans in the Mississippi area.

In North America pipes are made from clay, marble or lobster claws. Some pipes, with two stems, are used for inhaling through the nostrils. Tobacco chewing is common, especially in South America, where the leaf is mixed with lime.

1492
Arawak people in the Bahamas, on an island Christopher Columbus christens San Salvador, offer the explorer dried leaves. Not understanding their significance, Columbus discards them. A month later Rodrigo de Jerez and Luis Torres - returning from a trip into the interior of Cuba – stumble on villagers inhaling the smoke from burning dried tobacco leaves through a hollow Y-shaped piece of cane called a tobago or tobaca. Jerez is thought to be the first smoker outside the Americas.

When Jerez returns to his home town of Ayamonte, during the Spanish Inquisition, the holy inquisitors accuse him of "consorting with the devil" when they see smoke coming from his mouth. He is imprisoned for seven years. By the time he is released, smoking is a custom in Spain. Jerez perhaps sets a precedent for the plant's controversial future.

16th century
1518
The discoverer Juan de Grijalva lands in Yucatan, Mexico, and sees local people smoking tobacco leaves. The following year, the conquistador Cortez finds Aztecs in the capital of Mexico smoking strong, scented tobacco.
1526
In his history of the West Indies, Fernandez de Oviedo y Valdes writes: "Among other evil practices, the Indians have one that is especially harmful, the inhaling of a certain kind of smoke which they call tobacco. I cannot imagine what pleasure they derive from this practice."
1561
Jean Nicot, the French ambassador to Lisbon recommends tobacco snuff to his royal patron, Catherine de Medici, who suffers from severe migraines. The snuff provokes a relieving sneeze which astonishes her staff – but becomes fashionable. In Nicot's honour, the tobacco genus Nicotiania was later given its botanical name.

1570
Conquistadors bring tobacco back to Spain as a luxury for the wealthy. But when Seville beggars begin to pick up discarded cigar butts, shred them and roll them in scraps of paper for smoking, they become known as cigarrillos, meaning little cigars.

1570
King Philip II of Spain ponders tobacco's medicinal properties – not for the benefit of his subjects, but for commercial gain. He charges Royal Physician Francisco Hernandez with making a study of the plant's properties.
1571
Nicolò Monardes, a famous physician at the University of Seville, recommends tobacco as a cure for more than twenty ailments, including tooth ache and asthma. Certainly not recommended today!
1573
Sir Francis Drake returns from the Americas with what is thought to be the first consignment of tobacco to the UK.

1587
Virginian colonists disembark at Plymouth smoking clay pipes.

1592
A century after Columbus' voyage, tobacco is grown in Belgium, Spain, Italy, Switzerland and England, and by the turn of the century the crop has spread to the Philippines, India, Java, Japan, West Africa and China – from where merchants take it to Mongolia and Siberia.

17th century
1603
By the time of Queen Elizabeth I's death, England has become the wealthiest country in Europe (partly thanks to its dominant role in the tobacco trade) and is taxing the crop at 2d (2 shillings) per pound weight.
King James I publishes A Counterblaste to Tobacco, one of the first anti-smoking polemics. But his disapproval doesn't stop the King from increasing the duty on tobacco by more than 40 times as much as the tax levied by Queen Elizabeth, to 6/10d (£6 10 shillings) per pound weight. Consumption of tobacco increases as belief spreads that the leaf helps ward off the plague.
1606
King Philip III of Spain decrees tobacco could only be grown in Spanish colonies. Production by foreigners is punishable by death.
1614
James I grants two traders exclusive rights to import tobacco - paying £3,500 for the first year, rising to £7,000 each year for the next decade.

1619
King James I bans domestic cultivation of tobacco – and announces that it is to become a royal monopoly.
1623
Holy Roman Emperor Ferdinand III bans "tobacco drinking" under threat of fines – but smoking continues.
1624
Pope Urban VIII bans snuff claiming it takes users too close to "sexual ecstasy". King James I decrees that all tobacco should arrive at the port of London. Smuggling increases and sizeable amounts of duty are lost. The British Government widens the number of ports where tobacco can land.
1629
Following the advice of his minister Cardinal Richelieu, Louis XIII of France levies a tax of 30 sols on every pound of tobacco. Two centuries later Napoleon III would observe: "This vice brings in one hundred million francs in taxes every year. I will certainly forbid it at once – as soon as you can name a virtue that brings in as much revenue." Government monopolies prove so lucrative they persist in several European countries late into the twentieth century.
1633
Turkish sultan Murad IV forbids smoking with the threat of execution. He also demolishes coffee-houses in Constantinople and confiscates the assets of executed smokers.
1640's
Tsar Michael of Russia declares smoking a deadly sin. Arrested smokers are flogged or have their lips slit. A 1643 visitor to Moscow says: "Those convicted of taking snuff, both men and women, can expect to have their noses taken away."
1699
The court physician to Louis XIV, Fagon, offers a contemporary view: "When he opened his snuff box, did he not know that he was opening a Pandora's box, from which would spring a thousand ills, each worse than another?" Louis XIV is said to hate tobacco but does not ban it, as it would have meant giving up money from the state monopoly.
18th and 19th century
1700s
An increasing number of protectionist barriers are created, particularly in the eastern United States, to safeguard English interests.
1725
Following the fashion of the day, Pope Benedict XIII allows the use of snuff in St Peter's Church, reversing a ban imposed 75 years earlier by Innocent X.
1779
Scenting a business opportunity, the Vatican opens its own tobacco factory.
1800
British and French soldiers fighting in Spain during the Napoleonic wars bring cigars back home. Their popularity grows quickly.

1820
A smoking room is established in the British House of Commons.
1827
Cigar consumption increases with the invention of the friction-activated phosphorous match.
1846-48
The Mexican war leads to a huge increase in the popularity of cigars – smoked by soldiers trying to relieve fatigue and quash hunger. Soldiers develop a taste for the darker tobaccos from the south.
1850
In the United States, tobacco is linked to the temperance movement. Reverend George Trask, a former smoker, sets up the American Anti-Tobacco Society for which he serves as president, vice president, secretary, treasurer and auditor.
1868
Smoking compartments are introduced on English railways. 1881
James Bonsack, a Virginian, invents a machine that can produce 120,000 cigarettes a day. James "Buck" Duke, destined to become the first chairman of British-American Tobacco 21 years later, buys two machines and his family's tobacco company moves into cigarettes.
1890
In America, 26 states pass laws banning the sale of cigarettes to minors. 1899
Lucy Page Gaston, an Illinois teacher and journalist and member of the Women's Christian Temperance Union, establishes the Chicago Anti-Cigarette League.

20th century to today
1900
The Anti-Cigarette League publishes a pamphlet claiming links between cigarette smoking and brain disease.
1902
The Imperial Tobacco Company of the United Kingdom and The American Tobacco Company of the United States agree to end a trade war by forming a joint venture, the 'British-American Tobacco Company Ltd'. James B. Duke becomes the venture's first Chairman.

1908
The New York City authority bans women from smoking in public. Two weeks later Katie Mulcahey is arrested for violating the rule. As she is led away she declares, "No man shall dictate to me". Cigarette smoking was often seen as a symbol of women's emancipation.
1914
Outbreak of World War I. General John J. Pershing, commander-in-chief of the American forces in France in 1917, calls tobacco "indispensable to the daily ration". In Europe, troops use cigarettes to pass time and to try to calm their nerves. The popularity of cigarettes in the armed forces associates tobacco with patriotism.
1921
US State of Idaho bans cigarette sales.
1925
Despite the bans, cigarette sales continue to increase. The American Mercury reports, "The more violently it has been banned, the more popular it has become."
1941
US President Roosevelt makes tobacco a protected crop as part of the World War II war effort. His wife Eleanor was dubbed "the first lady to smoke in public".
1945
During World War II, smoking increases. By the middle of the next decade, more than a quarter of American women and more than half of American men smoke cigarettes.

1952
Two British researchers, Richard Doll and A. Bradford Hill, report the results of a four-year study comparing 1,465 lung cancer patients to an equal number of patients with other diseases, matched for age, sex and region. They conclude that lung cancer patients are considerably more likely to be smokers and much more likely to be heavy smokers.
1960s
Public health warnings emerge.
1964
The American Surgeon General publishes a 387-page report stating: "Cigarette smoking is a health hazard of sufficient importance in the United States to warrant appropriate remedial action." For the first time smoking is banned in the State Department auditorium.
1980s
The tobacco industry sees substantial annual duty increases which result in cigarette taxation increasing by 85 per cent or more in several countries, including the UK.

1990s
Litigation issues tend to dominate the news headlines around the tobacco industry. In the US, five years after the first State lawsuit was filed, major US tobacco companies signed a Master Settlement Agreement with 46 State Attorneys-General, giving these US states more than $200 billion in total over 25 years in settlement of lawsuits seeking reimbursement for the Medicaid costs of treating sick smokers. The Master Settlement Agreement restored stability to the tobacco companies, allowing them to concentrate again on running their businesses.

2000 and beyond
Litigation continues to be a significant issue for the tobacco industry, especially in the US, but the de-certification of the Engle class action lawsuit by a Florida Court of Appeal may point to a reduction in lawsuit activity. The Framework Convention on Tobacco Control (FCTC) is adopted by the World Health Organization; it calls for restrictions on tobacco advertising and sponsorships, new labelling standards, clean indoor air controls, and stronger action against cigarette smuggling. Tobacco companies work with governments to reduce smuggling. Bans on public smoking are enacted in some places and proposed in others; the ban in New York State is unpopular with a majority of voters Corporate Information
Registered Office
Pakistan Tobacco Company Limited
Evacuee Trust Complex
Agha Khan Road, Sector F-5/1
P.O. Box 2549
Islamabad-44000
Telephone: (051) 2083200, 2083201
Fax: (051) 2278376, 2278377
Web: www.ptc.com.pk
Company Secretary
Ayesha Rafique
Company Secretary
E-mail: ayesha_rafique@bat.com
Bankers
• ABN – AMRO Bank
• Citibank N.A.
• Deutsche Bank
• Habib Bank
• Hong Kong & Shanghai Banking Corp.
• MCB Bank
• National Bank of Pakistan
Standard Chartered Bank
Auditors
A.F. Ferguson & Co.
Chartered Accountants
3rd Floor, PIA Building
49 Blue Area, P.O. Box 3021
Islamabad-44000
Telephone: (051) 2273457-60
Fax: (051) 2277924
Share Registrar
Ferguson Associates (Pvt.) Ltd.
State Life Building No.2A, 4th Floor
I.I. Chundrigar Road Karachi
Factories
Akora Khattak Factory

P.O. Akora Khattak
Tehsil and District Nowshera, N.W.F.P.
Telephone: (0923) 630901-11
Fax: (0923) 510792
Jhelum Factory

G.T. Road, Kala Gujran, Jhelum
Telephone: (0544) 646500-7
Fax: (0544) 646524
Regional Sales Offices
North Punjab & N.W.F.P.
House No. 57-A/6, Satellite Town
Rawalpindi
Telephone: (051) 4582390-1
Fax: (051) 4582392
Central Punjab
128/129-G, Commercial Area
Phase-1, Defence Housing Authority
Lahore
Telephone: (042) 5899351-4
Fax: (042) 5899356
Southern Punjab
House No. 93, Street No. 3,
Meharban Colony, MDA Chowk, Multan
Telephone: (061) 4512553, 4584376
Fax: (061) 4542921

Sind & Baluchistan
8th Floor, N.I.C. Building
Abbasi Shaheed Road, Karachi
Telephone: (021) 5635490-5
Fax: (021) 5635500
Business Scope

Vision

“First Choice for Everyone”.

Mission

“Transform PTC to perform responsibly with the speed, flexibility and enterprising spirit of an innovative, consumer-focused Company”.

Objectives:

Strategic Objectives

1. Our strategy reflects our vision, being the champions of Growth, Productivity,
Responsibility and the Winning Organisation.

2. Higher Operating Margins, Volume Growth,
Level Playing Field and Winning Culture are defined at PTC as ‘Must Achieve Objectives

Corporate Objectives

“Our vision, mission and strategic objectives define the way we live and work”

Values

Open-mindedness

• We listen actively, communicate openly and value feedback.
• We are open and honest in all our dealings and foster a climate of trust and support.
• We encourage creativity and constantly challenge the status quo.
• We operate across functions and boundaries and involve all our stake holders.

Strength from diversity

• We seek ideas and accept input from a range of sources.
• We know and value individual abilities and utilise these in improving team contribution.
• We foster a diverse workforce.
• Equality is a hallmark of our workplace.

Freedom through responsibility

• We provide our people with the accountability, responsibility and resources they need.
• We actively coach and develop our people.
• We provide role clarity and set and maintain standards. • We provide an environment that encourages employees to maximise their potential. Enterprising spirit

• We constantly provide opportunities and experiences to learn and grow to maximise the individual potential.
• We encourage an innovative, creative environment. • We celebrate and reward success.
• We challenge our current way of doing things. Customers PTC’s target market is mainly divided into three segments according to its Brands.

High Class with High level brands:

PTC’s high level brands are:

• Dunhill’s
• Benson and Hedges
Middle class with Middle level brands:
PTC’s middle level brands are:

• John Players Gold Leaf
• Pall Mall
• Capstan
Lower class with Lower level brands:
PTC’s lower level brands are:

• Embassy
• Gold Flake

Product

BAT world-wide brands
British American Tobacco consumers - adult smokers - drive everything it does. The Group's goal is to satisfy consumers’ demands better and more profitably than its competitors do. British American Tobacco invests effort and care in understanding consumers’ preferences, and knows that adult smokers make informed choices about brands.
British American Tobacco's brand strategy differentiates it from its competitors and underpins its approach to product development. The Group continues to build a focused, segmented and differentiated brand portfolio and allocates resources to a full range of brands deployed in the key industry areas that offer the most robust source of volume and profit growth. These are the international, premium lights and Adult Smokers Under the age of 30 (ASU30) segments.

They continue to invest in PTC four global drive brands - Dunhill, Kent, Lucky Strike and Pall Mall, which have grown combined volumes by almost 50 per cent since 1999. Rothmans, Kool, Benson & Hedges, State Express 555, Peter Stuyvesant, Viceroy and John Player Gold Leaf are also part of PTC international brand portfolio, playing a key strategic role in the different regions where they do business

Pakistan Tobacco Company as name defines produces “Cigarettes” of different brands for different target segments.
Their brand portfolio consists of:

World Renowned Brands
BENSON & HEDGES
In 1873, Richard Benson & William Hedges started a partnership in London. From the very start, the idea was to make Benson & Hedges a style statement, which is why the business started from London’s fashionable West End.
PTC launched Benson & Hedges in Pakistan in March 2003. Made with the finest hand picked golden Virginia tobacco from across three continents, the brand is packed with perfection to seal its freshness.
JOHN PLAYER GOLD LEAF
The story of John Player Gold Leaf has to start from the story of its founder, John Player. An enterprising businessman, John Player started a small tobacco selling business in 1877 and turned it into a thriving cigarette company, John Player and Sons.
With a distinct lifebuoy and sailor trademark, John Player Gold Leaf has an identity entrenched in sailing and maritime adventure. Thus staying true to John Player’s very first big brand - Player’s Gold Leaf Navy Cut cigarettes.

Other brands

Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created under the auspices of W.D. & H.O. WILLS at Bristol and London.

Gold Flake, like many of PTC brands, also boasts its origins at W.D. & H.O. WILLS where it was a premium brand around the end of the 19th century.
Launched in 1982, in a 'soft cup' packaging, the brand took off when it was repositioned in the value for money segment and later a 'hinge lid' variant was introduced in 2000.

WILLS takes its name from the heritage of one of the origional Imperial Tobacco Company families: the Wills Brothers of London. Embassy, the third leading volume brand in Pakistan, is most popular in the Punjab where it enjoys a leading position due to its equity and loyalty.

Geography
PTC is manufacturing Cigarettes in two provinces Punjab and NWFP. Which’s detail is as follow:

Factories
Akora Khattak Factory

P.O. Akora Khattak
Tehsil and District Nowshera, N.W.F.P.
Telephone: (0923) 630901-11
Fax: (0923) 510792
Jhelum Factory

G.T. Road, Kala Gujran, Jhelum
Telephone: (0544) 646500-7
Fax: (0544) 646524

PTC religion sales offices are in all four provinces of Pakistan.Details are as below:
Regional Sales Offices
North Punjab & N.W.F.P.
House No. 57-A/6, Satellite Town
Rawalpindi
Telephone: (051) 4582390-1
Fax: (051) 4582392

Central Punjab
128/129-G, Commercial Area
Phase-1, Defence Housing Authority
Lahore
Telephone: (042) 5899351-4
Fax: (042) 5899356

Southern Punjab
House No. 93, Street No. 3,
Meharban Colony, MDA Chowk, Multan
Telephone: (061) 4512553, 4584376
Fax: (061) 4542921

Sind & Baluchistan
8th Floor, N.I.C. Building
Abbasi Shaheed Road, Karachi
Telephone: (021) 5635490-5
Fax: (021) 5635500

Board Members:

The Board comprises 7 non-executive directors and 5 executive directors. The positions of Chairman and CEO are kept separate in line with good governance practice.

Board Committees
The Board has a number of committees, which assist the Board in the performance of its functions.

Audit Committee
The Audit Committee is a committee of the Board of Directors and assists the Board in the manner provided in the Code of Corporate Governance issued by the SECP and forming part of the Listing Regulations of the Stock .
Exchanges in Pakistan. Its membership comprises the following seven Non-Executive Directors:
1. Fatehali W. Vellani (Chairman)
2. Lt. Gen. (Retd.) Ali Kuli Khan Khattak
3. Aslam Khaliq
4. Brendan James Brady
5. Istaqbal Mehdi
6. Kunwar Idris
7. Mueen Afzal

The Managing Director and Finance Director attend meetings of the Committee on standing invitation; however, they are not members.
The Internal Audit Manager is the secretary of the Committee and reports directly to the Chairman of the Audit Committee and the BAT
Asia Pacific Regional Audit Controller, who is based in Hong Kong.

The Committee held five meetings during the year at which the External Auditors were also in attendance to present and discuss specific issues. The quarterly, half-yearly and annual accounts of the Company and public announcements relating to them were reviewed and were recommended by the Committee before approval by the Board. Such reviews extend to major judgmental areas reflected in the accounts, significant adjustments resulting from the audit of accounts, the going concern assumption, changes in accounting policies and practices, compliance with applicable.

Analyzing the Internal Environment
The internal analysis reveals an organization’s most salient strengths and weaknesses. An honest appraisal, or “audit” of company operations, coupled with a revealing environmental analysis, provides a strong foundation for creative strategy development.
The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets. Any analysis of company strengths should be market oriented/customer focused because strengths are only meaningful when they assist the firm in meeting customer needs. Weaknesses refer to any limitations a company faces in developing or implementing a strategy. Weaknesses should also be examined from a customer perspective because customers often perceive weaknesses that a company cannot see. Being market focused when analyzing strengths and weaknesses does not mean that non-market oriented strengths and weaknesses should be forgotten. Rather, it suggests that all firms should tie their strengths and weaknesses to customer requirements. Only those strengths that relate to satisfying a customer need should be considered true core competencies.
The following area analyses are used to look at all internal factors affecting a company:
• Resources: Profitability, sales, product quality brand associations, existing overall brand, relative cost of this new product, employee capability, product portfolio analysis
• Capabilities:
Goal: To identify internal strategic strengths, weaknesses, problems, constraints and uncertainties

Value Chain Analysis

The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organization. The 'margin' depicted in the diagram is the same as added value. The organization is split into 'primary activities' and 'support activities.

Inbound Logistics

PTC has enjoyed long-term relationships with many loyal and committed suppliers who are integral to out business. But our business is changing rapidly as we seek greater competitive advantage through efficiency gains and innovation. We are anchoring Group Strategy around growth, productivity, responsibility and a winning organization, in order to achieve leadership of the global tobacco industry. Better supply chain relations & performance are essential if we are to achieve this.
The Pakistan Tobacco company is not directly involved in the production of its raw materials but has farmers supply the finest grade tobacco to its factory in Jehlum. We import tobacco leaf from inside the country as well as outside the country. Tobacco is an important source of employment and income not only in Pakistan but also in over 20 countries where it is cultivated. Grown most widely among the non-food crops, tobacco occupies a mere 0.3% of the world’ arable land compared with 0.7% for coffee and 12% for cotton.

In our leaf supply chain our proactive approach is definitely towards agronomy support for farmers which gives us access to responsibly managed sources of quality leaf supply that is unrivaled in the industry. Tobacco was first grown in the sub-continent in Karalla district of Indian Gujrat. In 1947, the country met its entire tobacco requirements from imports. The cultivation of the Flue-Cured Virginia Tobacco was introduced in Pakistan in 1948 by Pakistan Tobacco Company. The tobacco industry is regulated by Pakistan Tobacco Board.

Our philosophy for supplier partnerships is a group statement on supply chain management which has been distributed to key global, regional and local supply partners. It builds on our Business Principles and supply chain practices. Amongst standards we expect of suppliers we do not tolerate child labor [other than genuine apprenticeships], use of forced or illegal immigrant labor, working conditions that do not meet our own occupational health or safety standards and any form of unlawful discrimination, harassment, abuse or bullying.

The stand-off between tobacco growers and tobacco companies over determining the support price of the commodity always emerges with the beginning of tobacco crops marketing season. Protest demonstrations are common where the growers believe that they are not being given prices for their crop which they deserve. They seek Rs. 150 per kg for grade A tobacco and Rs. 100 per kg for grade B tobacco while currently the prices range between Rs. 55 to Rs. 60.

PTC’s Leaf Buying System and its Green Leaf Thrashing System is supported by a highly sophisticated software system called NorskData. This offers a software & application development domain along with a consultancy domain.

Other tools used in supply chain management include:
1. BEST [Business Enabler Survey Tool]
2. SQP [Supplier Quality Partnership]
3. SRTP [Social Responsibility in Tobacco Partnership] program
Supply chain management is about the efficient movement of goods from supplier to customer premises to achieve the required level of customer service at minimum cost.
The Supply Chain team focuses on continuously improving the Pakistan Tobacco Company’s planning processes and the supply and distribution of our materials and products.
Then following manufacturing, the further movement or distribution of finished goods throughout Pakistan to the retailers and eventually onto our consumers.
Pakistan Tobacco Company’s Supply Chain Function can be further defined as:
• The execution of the internal and external processes for co - ordination of planning, supply, distribution and security of Pakistan Tobacco Company’s materials & products.
• From the Supplier of raw materials, through the manufacturing facility to the consumer.
• With the intention of ensuring availability of our product to the consumer at all times.
• At optimal quality, whilst maximizing efficiency and cost effectiveness for all parties involved while ensuring that the product reaches the consumer in the best possible condition.

The supply chain is now taking a more strategic and global approach so that the complexity of the business can be reduced somehow and continual improvement is promoted in efficiency, quality, business practice & innovation among supply partners. We plan to comply with all applicable national & international laws & regulations; Establish procedures for assessing and reviewing activities on a regular basis; and seek to identify pro-active and cost-effective measures throughout our supply chain, especially in the application of high standards of agricultural practice in tobacco growing.

Our supply partnership philosophy is based primarily on our Statement of Business Principles, of which there are three: Good Corporate Conduct, Responsible Product
Stewardship, and Mutual Benefit, each explained in more detail by a series of Core Beliefs. The following Core Belief under Mutual Benefit anchors our supply chain philosophy:
“We believe that suppliers and other business partners should have the opportunity to benefit from their relationship with us.”

What this means in practice is that supply partners should expect the following from their relationship with us:
• Open and transparent communication;
• Shared responsibility to solve problems rapidly in the supply chain, working together to minimize and manage business risk and improve business practices;
• A joint approach to pursuing improvements in the supply chain, through education, training and the sharing of good practice;
• Group companies will uphold British American Tobacco policies and will encourage, and, where appropriate, help supply partners to embrace them.

Supply partners should also be aware of our policies and principles. This is particularly important as we are committed to being a responsible company in an industry often seen as controversial. This means that we – and our supply partners – need to uphold and demonstrate high standards of integrity, accountability and business practice. What follows is a brief introduction to the relevant policies and principles:
• We take environmental performance into account when selecting and reviewing suppliers;
• We expect high standards of environmental management from our supply chain and business partners;
• We will work with our immediate suppliers and principal business partners to help them reduce any negative environmental impacts associated with their products and operations.
The Leaf Department is responsible for purchasing, processing, packing, shipping, and storing domestic and imported tobacco for Pakistan Tobacco Company.
Essentially, it is the Leaf Department’s job to ensure a secure, continuous and consistent supply of tobacco at the best cost and right quality (as required by our Blenders) to maintain the correct taste of final products for the consumer. Therefore, the Leaf Team’s skills make a significant contribution to the ongoing success and reputation of our brands, as well as our Company’s position as market leader.
Achieving this objective demands more than simply buying tobacco. The team manages the tobacco all the way from the grower's selling floor to input into factory production:
• Making a split second decision on purchasing tobacco on the selling floor
• Assist with the management of a green leaf threshing plant
• Finalizing multi - million dollar purchases of tobacco
• Using your judgment to alter a blend recipe in the green leaf threshing plant
• Seconded to the British American Tobacco global buying team contracted to purchase leaf on behalf of individual operating companies
• Travelling significantly domestically and overseas
• Managing the administration, financing and accounting function of Leaf Department
• Managing tobacco shipping, storage and fumigation
The Leaf arena within Pakistan Tobacco Company includes:
• Managing and developing tobacco growing program
• Purchasing tobacco
• Tobacco green leaf processing
• Tobacco blending / mixing
• Supplying agronomy expertise

Operations

Pakistan Tobacco Company Limited is incorporated in Pakistan and is listed on the three stock exchanges in Pakistan. It is engaged in the manufacture & sale of cigarettes. The edible oil operations were discontinued during the year 2000. Phoenix Pvt. Ltd. was incorporated on 9th March 1992 in Azad Kashmir as a wholly owned subsidiary of PTC to deal in tobacco products.
Manufacturing is at the heart of our business, so we invest substantially in new technology to ensure that our factories are highly flexible and responsive to the needs of our customers and consumers alike.
Working in manufacturing means constantly having to balance the demands of availability, quality and cost. Our people operate in a high speed environment and under tremendous pressure, so they need the strength of mind to make quick decisions, often basing them on limited information. They also need to be open to innovative solutions that can improve our processes and balance supply and demand while minimizing working capital.
And world-class manufacturing is about far more than technology. Seemingly small issues can have an enormous impact - not only on processes and targets, but also on the morale of our factory teams. That’s why our people need to be effective leaders, too, demonstrating the ability to build effective teams while committing to the highest levels of production, quality and safety.
Manufacturing within Pakistan Tobacco Company includes:
• Product knowledge
• Process and control
• Knowledge of technologies
• Quality
• Supply chain management
• Regulatory framework
• Employee relations
• Excise
• Environmental, health & safety
• Project management
• Commercial awareness

We continue to enhance our own rigorous and transparent environmental management systems to reduce the negative environmental impacts of our operations, while taking environmental considerations into account in designing new products. We believe we should work together with the rest of the industry, business partners and suppliers to address the environmental impacts associated with tobacco production.

Social reporting is about providing an accurate and transparent account of the company’s operations; providing a platform for communicating concerns and through stakeholder dialogue an early warning system about issue-awareness and the management of social issues. The process itself involves identifying a broad range of public stakeholders with whom consultations can be held. These can vary from the government sector to civil society organizations, to the private sector and pressure groups etc. Then to hold meaningful dialogue and consultations with these groups as equal partners. Agreement will be sought on the actions between PTC and the stakeholders.

The regular operations of PTC include holding regular meetings with tobacco growers to inform them about the targeted requirements of tobacco companies for next years crop; to find out their problems and to educate them about the cultural operations, plant protection measures, topping and control of suckers, picking and curing operations.

Pakistan Tobacco Company received the industry category of the Supply Chain Operational Excellence Award. The company is part of the worldwide British American Tobacco (BAT) Group, which employs over 85,000 people with operations in around 180 countries. Today, Pakistan Tobacco Company is the largest revenue generator (outside the oil sector) in the country, paying more taxes than the entire textile sector, which is the largest industrial sector in the country.

PTC does not employ children in any part of the manufacturing operations. They are committed to the principles of protecting children from child labor exploitation & seek to apply this commitment throughout the supply chain not just their manufacturing.

While it is impossible to be certain of the outcome of any particular case of litigation against the company or of the amount of any possible adverse verdict, the Company believes that the defenses of the Group companies to all these various claims are meritorious both on the law and the facts. Nevertheless, it is not impossible that the results of operations or cash flows of the Group could be materially affected by the final outcome of any particular litigation.

Accounting & Finance
• Daily Cash Position System, Pakistan Tobacco Company Limited, Pakistan
• Development of With-Holding Tax Calculation Software and Integration with CS/3, Pakistan Tobacco Company, Pakistan
Banking and Insurance
• LC Tracking System, Pakistan Tobacco Company Limited, Pakistan
• Insurance System, Pakistan Tobacco Company Limited, Pakistan
Manufacturing and Production
• LC Tracking System, Pakistan Tobacco Company Limited, Pakistan
• Green Leaf Thrashing System, Pakistan Tobacco Company Limited, Pakistan
• TP Refund System, Pakistan Tobacco Company Limited, Pakistan
• Capital Expenditure System’s modification, Pakistan Tobacco Company, Pakistan
• Leaf Buying & inventory System, Pakistan Tobacco Company Limited, Pakistan
• Leaf Costing System, Pakistan Tobacco Company Limited, Pakistan
Miscellaneous Projects
• Implementation & Customization of CS3 (MRP II Software) at Pakistan Tobacco Company, Pakistan.
PTC needs to have extremely cost efficient operations in order to earn profits because the margin is rendered extremely narrow due to illicit trading done under the control of various ministers. These tradings have to pay no tax to the government whereas PTC is taxed heftily. Gold leaf has a duty of 80%, meaning 37 rupees out of 45 go straight to the government. It also harms PTC’s brands, devalues PTC’s investment in local operations & distribution networks and undermines the regulatory regimes governing the legitimate industry.

British American Tobacco including its subsidiary companies aims to apply the best international standards of practice in all aspects of its operations which relate to the health and safety of its employees at work and non-company personnel on company premises and the conservation of the physical environment and to give a high priority to these activities.

Under the provision of Article 20.4(c), the regular collection and dissemination of information on “the activities of the tobacco industry which have an impact on the Convention and national tobacco control activities.” Parties to the FCTC build on WHA 54.18, committing to establish and maintain a global system to monitor the tobacco industry and make its operations transparent.

Outbound Logistics
Our aim is to build an excellent Trade Marketing & Distribution capability which bears the hallmark of a world class field force for effective retailer and consumer contact. Trade marketing is a large part of our activity - managing business-to-business relationships with the retailers from whom our consumers buy. We place as strong an emphasis on being a high quality supplier to the trade as we do on working to ensure high standards amongst our own suppliers.
375 exclusive Distributors employing a contingent of over 1200 distribution representatives provide direct store delivery service of our finished products to the 400,000 plus retail stores throughout the country. In doing so we aim to optimize our finished goods Supply Chain efficiencies in delivering products of consistent quality on-time, every time.
The company's Trade marketing field force provides value added services in complimenting the distribution effort, in select stores of the universe to enable mutually beneficial partnerships. We make substantial investment in Retail, through quality in-store and on-store furniture and fittings to stock and display our products for the convenience of our consumers.
We aim to become the benchmark partner to the trade in the strategic channels where we do business. We work to operate in the most efficient and effective way so that retailers can offer the products our consumers want to buy where they want them, when they want them, at the right quality and quantity.
As well as hundreds of regional and local customers, we have 10 key customers managed at a global level: 7-Eleven, Ahold, BP, Carrefour, Chevron Texaco, Couchetard, Exxon Mobil, Shell, Tesco and Walmart. Their very large businesses are mainly in the grocery, convenience and petrol station convenience channels.
Our approach is based on building mutually beneficial relationships, characterized by integrity, with our trade partners globally, regionally and locally.

Our aim is not just to focus on our own goals, but to engage with senior management of partner companies for a good mutual understanding of each other’s global strategies and to identify potential areas of alignment and cooperation. We also aim to offer our trade partners a comprehensive insight into consumer preferences and buying behavior in the tobacco category, providing useful analysis of the category as a whole.
We call this our ‘win win’ approach - recognizing that for a successful relationship and mutual benefit, there has to be a win for the three key stakeholders: our business, our customers and our consumers.
Pakistan Tobacco Company (A member of the British American Tobacco group) selects Cerebiz as an Information Dashboard for its Sales force Information System (SiS). Pakistan Tobacco Company, which has over 350 distributors in Pakistan, signed up with Kandysoft Global Corporation, in order to automate its Distributor and Sales force operation. Cerebiz is a Plug-in to the SiS data warehouse to provide Dashboard facilities to its information users.

PTC has employed yEvolve (www.yEvolve.com) for its outbound logistics. yEvolve focuses on the development of mobile CRM/PRM applications with proven expertise in Palm OSâ/Pocket PCâ platforms as well as SMS and GPRS based solutions. The Sales Force Automation solutions are available for Transport and Fleet Management, Healthcare and Distribution & Channel Management verticals.

Distribution systems employed by PTC courtesy NorskData

• Market Trend Evaluation System for TME/TMO, Pakistan Tobacco Company, Pakistan
• Distributors Evaluation System, Pakistan Tobacco Company, Pakistan
• Implementation & Customization of CS3 (MRP II Software) at Pakistan Tobacco Company, Pakistan.

Business: Pakistan Tobacco Company manufactures and distributes their products across the country and have distributors in many towns.

Challenge: PTC wanted to automate and manage all its sales force from one prime location - the head office. The problem was the availability of data at the head office. With salesman on the move, the time for data acquisition ranged from 2 to 3 days. Also this data was prone to errors and required considerable time for feeding.

All this delayed the critical information from being available to decision makers and marketing department. Apart from data availability PTC Management wanted different reports regarding customers, product trends, sales promotion, daily/monthly reports, etc.

Intelligence: Our strategy was to give them a system which was not only efficient, simple, and powerful but one which would cater to their needs well into the future. We studied how exactly they sell, what they may want to further branch out to in the future, and how they go about selling.

How they wanted to keep records of their customers, sales, promotions and distribution network was also examined so that meaningful reports could be generated.

Solution: A wireless solution to sales management and the distribution network was developed.

We designed for them a completely new architecture for data acquisition. The architecture catered to sales team management requirements, dealing with customer records, sales and promotions and statistics of customers and sales. The front end application was developed in Visual Basic so as to allow them to be able to use it on their Microsoft Windows based environment. The PDA application was developed in C language using Code Warrior IDE for Palm OS 3.0.

The solution used wireless devices for data input. The salesman enters data into the PDA application while interacting with the customers. The PDA application maintains the stock a salesman has total sales he has performed, order data and targets.

This data is then transferred to the head office at the end of day transparently. The management can access data as soon as it is entered into the system and hence decision making becomes more intelligent and efficient. A web interface also allows the management to access the reporting features from around the globe.

The Global Award for Supply Chain Excellence recognizes the organization that was judged by the Supply-Chain Council Selection Committee to have made the greatest contribution to demonstrating or advancing the supply chain management body of knowledge during the last year. The winner is selected from the four winners of the other Supply-Chain Excellence Awards, which includes the U.S. Department of Defense category of the Supply Chain Operational Excellence Award, the industry category for the Supply Chain Operational Excellence Award, the Supply Chain Management Technology Excellence Award, and the Supply Chain Academic Excellence Award. This year's Global Award went to the Pakistan Tobacco Company, the industry category winner of the Operational Award.

Amongst standards we expect of suppliers we do not tolerate sales of cigarettes to minors denial or access to or unfair application of a transparent grievance procedure or any forms of unlawful discrimination, harassment, abuse or bullying.

Building partnerships: In late 2005 British American Tobacco agreed a 5-year global contract with Shell from 2006, as its preferred business partner in the tobacco sector across the 5,500 Shell convenience stores in 48 countries around the world. The relationship offers significant benefits to our business in growing our brands and will benefit Shell through the sharing of tobacco consumer insights. We were greatly encouraged that Shell said that in choosing a preferred partner, it looked for a company that could add value, had integrity, had the energy and commitment to build the category and was willing to work for mutual benefit with a ‘win win ’ approach.
The tobacco industry in Pakistan makes a significant contribution to all economic sectors, from farming through manufacturing, to distribution and retailing. It is also a major purchaser of supplies from other industries and its contribution is, therefore, much more widespread than it appears at a cursory glance.

We have devised a term of ‘trade’ for all the individuals or organizations engaged in the legitimate manufacture, distribution, marketing or retailing of tobacco products or their component parts. This term also includes agents and employees of these organizations.

The primary packaging which we finally distribute is the packaging on tobacco products as intended for retail sale to consumers. PTC aims to be spot-on with packaging, taste and product formats that consumers like, with quality that consumers are willing to pay more for and with availability of its brands in the places where its consumers want to buy.

Marketing and Sales

At Pakistan Tobacco Company, the consumer is at the centre of our business. Marketing in the tobacco industry requires skills beyond the demands of other products. The ability to differentiate our marketing initiatives, to manage productive and profitable relationships with our key accounts, to integrate strategies above and below-the-line and to innovate while always marketing responsibly are the fundamentals of the marketing challenge.
The marketing arena within Pakistan Tobacco Company includes:
Consumer Insights
A comprehensive understanding of not only consumer needs and preferences but also purchasing behavior is essential to our business.
Key Insights activities are:
• Development of appropriate marketing research tools and techniques
• Design and implementation of appropriate research projects
• Evaluation of the effectiveness of marketing activities
• Production of marketing and competitor information
• Contributing to the development of marketing strategies and plans
• Training of marketing personnel in the interpretation of research data
Building Brands
The effective management of all elements of the Marketing Mix (with the exception of above-the-line and other marketing activities restricted by law, and by our voluntary internal marketing standards) is critical to our marketing success. Those involved in brand development need to demonstrate a comprehensive understanding of the market place including how and where consumers buy tobacco products. Key brand development activities include:
• Development of overall brand strategy
• Brand portfolio management
• Leading the product development process
• Brand positioning and brand template
• Developing innovative methods of targeting and communicating with consumers
• Developing merchandising strategies and point of sale materials
• Managing brand profitability
• Managing Retail Media
Managing Business Channels
The effective management of relevant business channels is one of our key marketing activities. Although business channels vary from market to market depending on the trade structure, building close professional relationships with key accounts and in Hotels, Restaurants and Cafes (HORECA) are likely to be priorities for most markets. Key activities include:
• Channel strategy development
• Negotiations with key accounts
• Category management
• Account portfolio management
• Account servicing
• Pricing, promotional control and evaluation
Managing Availability and Distribution
Ensuring that consumers are able to purchase the products they require, both where and when they want them, plays a major part in achieving a high market share. Key activities include:
• Development of distribution strategy
• Develop and implement distribution plans
• Implement merchandising and point of sale policy
• Monitor and manage out of stocks
• Build an effective sales orientated organization
Product Development
We are continually seeking ways to make our products more competitive and relevant to consumers, and to continuously improve our market leading products.
We research consumer preferences to create products that exceed the expectations of informed adult smokers.
Our work includes:
• Tobacco blending
• Materials & product development
• Designing cigarettes
• Physical & chemical data analysis
• Smoking panel & consumer evaluation

British American Tobacco p.l.c. believes there is sufficient scientific evidence to support a less restrictive regime for the advertising and promotion of certain smokeless tobacco products, on the basis of their potentially lower health risk. Group companies will, however, continue to apply these Standards to the marketing of these products, pending further dialogue with regulators.

Group companies will actively encourage the trade to apply these Standards in any direct dealings that the trade has with consumers when marketing our Tobacco Products.

Given the decline of our sales volume in 1999 -- down 15% versus 1998 –we performed a thorough review of our brand portfolio and our level of marketing expenditure by brand. We identified brands that had failed to receive any level of support for many years and, conversely, areas where consumer response had been rather limited despite significant support levels. As a consequence of this review, we reallocated our marketing expenditure across our brands and, perhaps more importantly, increased our level of marketing expenditure by 28%. Our total marketing investment grew from a level of Rs 681 million in 1999 to Rs 873 million in 2000. This significant increase of Rs 192 million helps explain the decline in operating profit.

As well as setting restrictions on their marketing, PTC encourages to lobby governments for a regulated minimum age for buying tobacco. PTC also runs or support youth smoking prevention programs around the world, over half of them helping retailers to block under-age access at the point of sale.

PTC’s approach starts with really understanding the different profiles of our consumers. It invests in gathering comprehensive insights into smokers’ preferences and buying behavior, then invest in developments across the marketing mix that aim to be truly relevant to consumers’ tastes, attitudes, pockets and purchasing patterns.

PTC also wants to offer consumers a less harmful way to enjoy tobacco, and in several countries it is selling or test marketing smokeless Swedish-style snus, which is supported by several independent health experts as significantly less harmful than smoking cigarettes.

The strong performance of BAT drive brands so far suggests that consumers and trade customers think them getting it right. Over recent years, they have grown the global drive brands by more than 80 per cent while at the same time obeying strict laws on tobacco marketing and adopting tight voluntary marketing standards of their own, that in several countries go beyond the law.

A 'disorderly' market is one where there is contraband and counterfeit, which can appear in any market where popular brands suddenly become no longer available. As we withdrew from Myanmar in an unprecedented way from direct management of an operation, we sought to ensure that our popular brands did not suddenly disappear. Our companies work to tackle contraband and counterfeit around the world. In the contract under which we license certain brands, in Myanmar as elsewhere, we also require adherence with our International Marketing Standards.
Successful marketing is the bedrock of growth for any fast moving consumer goods (FMCG) business and we are no exception.
But when we talk about growth, there’s a big point to make clear. By growth, we don’t mean ‘selling smoking’ to boost the number of people in the world who smoke or the amount they smoke. We mean growing our share – more specifically, the value of our share – of the large number of adults who choose to be tobacco consumers.
As Jimmi Rembiszewski, our Marketing Director, puts it: “Ours is a mature market – one where everyone already knows what tobacco is. There would be no commercial sense in trying to promote tobacco products to people who know what they are and have decided they don’t want them.
“We invest in positioning our high quality brands competitively for the adults who’ve decided they do want to buy tobacco. And we’ve shown that through focus, intelligence, responsiveness and a high priority on responsibility, we can successfully build the brand loyalty of adults who have chosen to be tobacco consumers and win consumers away from competitor brands.”
A billion adults worldwide choose to consume tobacco. Our aim is not just to maximise our share of sales – value and quality are high on our agenda. We aim to keep adding value for our consumers, trade customers and shareholders through an approach we call ‘win-win-win’. This means giving our consumers premium value through premium quality and unique, differentiated brands, enabling our trade customers to benefit from premium margins and, by satisfying both consumers and trade customers, delivering long term sustainable value for our shareholders.
Sales by our subsidiary and associate companies account for just over 17 per cent of the global cigarette market and our share of the value of the global market is higher. Our share is a lot more than it was a decade ago and we have set our sights firmly on growing it yet more.
Global drive brands
Our global drive brands - Kent, Dunhill, Lucky Strike and Pall Mall - are at the forefront of our innovations, product refinements and trade engagement, with each brand differentiated and given a special focus within our ‘win-win-win’ approach. We aim to grow our drive brands by high single digits a year over the medium to long term and continue increasing the large proportion of value they contribute to our global brand portfolio.
The strong performance of our drive brands so far suggests that consumers and trade customers think we’re getting it right. Over recent years, we’ve grown our global drive brands by more than 80 per cent - while at the same time obeying strict laws on tobacco marketing and adopting tight voluntary marketing standards of our own, that in several countries go beyond the law.
Growth of our global drive brands (billions of cigarettes sold) Given the restrictions - including the tight restrictions we set for ourselves - people often ask us how we do deliver such strong brand growth.
The answer is simple, though it takes hard work and skill to achieve. We have developed approaches that we believe are appropriate for modern marketing of our challenging product, and pursue excellence in everything we do.
We believe that accepting and implementing tighter marketing restrictions for a risky and controversial product is not only the right thing to do, but that it has helped us to bring focus and discipline to the marketing we can do, by removing distractions and enabling us to build our skills in the right marketing fundamentals.
This new way of marketing has brought us back to where brand marketing started – with product information and differentiation offering the adult smoker real choice.
Find out more about our approach to the ‘5 marketing Ps’ for tobacco product brands in Modern tobacco marketing.
For us, modern tobacco brand marketing is driven by an excellent understanding of the consumer and by sticking to the marketing fundamentals that are appropriate to our challenging product.
We recognize that mass media promotion – such as on big high street billboards, TV and radio, event-sponsorship like Formula 1 or mass-circulation print advertising – now belongs to the past.
There has been much debate about whether mass media promotion of tobacco product brands can influence under age smoking. But we say the debate is over. There is discomfort that high profile promotion may ‘splash over’ to the under age and we acknowledge that society is finding it less and less acceptable. With the launch of our International Marketing Standards in 2001, we decided it was time to move on.
Says Jimmi Rembiszewski, our Marketing Director: “We have re-defined our marketing in ways that allow us to continue to satisfy consumer preferences, while responding to reasonable stakeholder expectations of how we should market tobacco.