British American Tobacco

British American Tobacco logo
British American Tobacco logo

British American Tobacco which was founded back in the year in 1902 is currently the second largest company producing tobacco products in the world, following the largest company which is Philip Morris. The headquarters of BAT are located in London, England, but its products are sold in more than 180 different countries globally, while in 50 of these countries the BAT manufactured products hold the number one position in the sales of cigarettes. American Tobacco sells its products in over 180 countries worldwide and is in pole position in over 50 of those countries. The company produces many different cigarette brands, the best- selling of which are currently Benson & Hedges, Lucky Strike, Dunhill, Rothmans, Kent, Kool and Pall Mall.

A true success story as a business venture, British American Tobacco is in fact the sixth largest company to appear on the FTSE 100 Index, while its market capitalization is valued at over sixty-five billion GBP. The company’s stock is traded in all major stock exchanges, including the London Stock Exchange under the symbol BATS, the American Stock Exchange under BTI and the Johannesburg Stock Exchange under BTI.

As its name implies, BAT is a prime example of a transatlantic business concern, since its initial establishment in 1902 was in fact a joint venture of a British company, British Imperial Tobacco company, and an American company, the American Tobacco Company. The agreement between the two companies entailed that each would respect and not attempt to penetrate each other’s existing territorial sales base, while the joint venture would pursue all overseas market. The arrangement worked out and soon BAT had expanded into most foreign markets, including in Australia, South Africa, New Zealand, China, Germany, and Canada.

The newly acquired Chinese market was to prove exceptionally lucrative for BAT, which set up a factory in Shanghai which as early as in 1919 was producing more than 243 million cigarettes annually. This factory reached its peak output in 1937, when its production and distribution in China alone had reached the astronomical number of 55 billion cigarettes per year. BAT’s Chinese boom was violently disrupted when in 1941 the Japanese who had then invaded and occupied China, seized the company’s assets that were based in China. BAT was eventually exiled from China all together in 1953 following the Chinese revolution and the establishment of the regime of the People’s Republic of China.

The next step in BAT’s development was the acquisition of one of its initial parent companies, the American Tobacco Company, which has meant that its very popular brands of Lucky Strike and Pall Mall were officially brought under the BAT umbrella. Another leap for BAT was its merger with Rothmans International which went ahead in 1999. This move however gave rise to some controversy, since BAT had as a result acquired shares into a former Rothmans’ factory located in Burma. BAT was forced to subsequently close down this production unit as it was severely criticized by human rights activists about the working conditions there. The criticisms were so strong that the British government was forced to make an ‘exceptional request’ to BAT, to terminate the facility.

More recently, BAT has grown and expanded even further to the point where some analysts argue that it will soon pose a real threat to Philip Morris’ pole position in the tobacco industry. The more recent cycle of expansion for BAT commence in 2003 when in acquired the Italian state owned tobacco company, as well as acquiring a majority share in Serbia’s biggest tobacco manufacturer. Furthermore, in 2008 BAT bought Turkey’s national cigarette producer Tekel  and the Scandinavian Tobacco company. In 2009 the Bentoel Group of Indonesia was the next company to be acquired by BAT, while in 2011 the big cigarette manufacturer Productora Tabacalera de Tabacos S.A. came under BAT’s control.