British American Tobacco's Russian arm increased its share of nation's cigarette market to 21.2% last year, company says

Nevin Barich

MOSCOW , March 6, 2014 (Interfax Information Services) – BAT Russia, the Russian structure of British American Tobacco, increased its share of a shrinking Russian cigarette market to 21.2% last year, the company said.

That market contracted 7.5% in 2013, it said.

It was not a simple year for the tobacco industry, BAT Russia chief Johan Vandermulen said. Market contraction naturally affected company sales, he said. In addition to higher excises that push prices up, the market is influenced by contraband cigarettes from neighboring countries, he said. Illegal trade causes huge losses for the Russian budget, he said.

BAT became the only major company in the sector able to increase market share last year, according to Nielsen data on the retail cigarette trade in urban and rural Russia. That was possible due to strengthening of the position of BAT's main brands in their pricing segments and the advent of new brands such as Lucky Strike," Vandermulen said.

In the premium segment, Kent increased share to 35.8% last year from 35.5% the year before. Company brands in the 'quality at a reasonable price' segment - Yava Zolotaya, Pall Mall, and Rothmans of London - share increased to 21.4% from 18.7%. In the low-cost segment, the share of Alliance increased to 13.9% from 13.2%.

The company increased investment in its Russian factories by more than 40% to 1.6 billion rubles last year from 1.1 billion rubles in 2012. Money was put into the modernization of production in St. Petersburg and Saratov.

BAT-SPB and BAT-STF produced 73.9 billion cigarettes last year, including 7.8 billion for export. That was an 8% decrease in production from the year before.

The company paid 68.8 billion rubles in taxes in 2013, 30% more than in 2012.

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