BAT predicts global cigarette consumption to stay stable

British American Tobacco (BAT) on Friday forecast that the world's consumption of cigarettes was likely to remain fairly stable at 6 trillion cigarettes a year, one-third of which are sold in China.

The cigarette company, responsible for the Dunhill, Kent and Lucky Strike brands, plans to ensure it is well-placed to meet the needs of consumers, whether they are down-trading in times of recession or up-trading as the economic situation improves.

Six years ago, the UN conducted a study of the world's tobacco consumption and found that the number of smokers in the world was expected to grow from 1.1 billion in 1998 to about 1.3 billion this year, an increase of about 1.5 percent annually.

This is in direct contrast to BAT's estimations in its latest annual report, which states that the global legal market had shown a decline in consumption by 1.5 percent annually over the long term.

BAT chief executive Paul Adams said trends indicated that individual smokers would consume fewer cigarettes each and smaller percentages of populations would smoke.

"However, offsetting these trends, the number of adults in the world over the age of 20 continues to grow," he said.

He said volume declines had been evident in a number of markets last year and BAT expected global volumes to remain under pressure this year.
"We estimate that the global legal market, excluding China, fell by 3 percent last year compared with its long-term trend of declining 1.5 percent," he said.

But pricing had remained positive, and the global profit pool was expected to continue to grow.

"In many key markets, legal volumes have been affected as consumers move to illicit products," Adams said.

He said illicit trade in tobacco products - smuggled, counterfeit or tax evaded - was in effect one of the company's major global competitors and represented nearly 12 percent of world consumption.

BAT reported a gross turnover of £40.7 billion (R447bn) for last year. Adams reported that acquisitions continued to play a part in its growth strategy and explained that its latest acquisition - Bentoel in Indonesia - gave the group a strong position in the fourth-largest cigarette market.

The UN in its report predicted that more tobacco would be smoked in developing countries, where tobacco consumption was expected to grow to 5.09 million tons this year from 4.2 million in 1998.