Our business model for sustainable growth
Our business model is designed to deliver sustainable growth in earnings per share of 7-9 per cent on average. Through the consistent application of our Group strategy we can deliver the revenue growth that will enable us to achieve our ambition of leading our industry and, as a result, build shareholder value. We can only sustain this growth if it is funded by improved productivity across the business and delivered by a winning organisation that acts responsibly at all times.
Our success depends on really understanding the different profiles and preferences of our consumers.We recognise that our business starts with our consumers and our brands. We invest in gathering comprehensive insights into smokers' preferences and buying behaviour. This information helps us offer product innovations that are relevant to adult consumers' tastes, attitudes, pockets and purchasing patterns. Our aim is to create value for our business and our consumers by meeting their needs and offering appropriate quality. Our brand portfolio remains evenly balanced across all price points – Low-Price, Value-For-Money and Premium – to ensure we can continue to develop consumer loyalty.
Read more at www.bat.com/consumers
We work with tobacco farmers and other suppliers to promote high ethical, environmental and work place standards.We are the only tobacco business with a significant interest in tobacco growing and we work directly with around 70 per cent of the farmers we purchase our leaf from. We also purchase significant quantities of other raw materials, such as packaging, cigarette paper, filter materials, glues and inks. We manage our supply chain responsibly and engage with our suppliers to help address their social, environmental and economic impacts. This engagement creates a shared understanding of our supply chain, enabling us and our suppliers to make better decisions, generate efficiencies and effectively manage risks.
Read more at www.bat.com/sourcing
Manufacturing tobacco products is a large-scale operation and we have factories all over the world.We work to ensure that our costs are globally competitive and that we use our resources as effectively as possible. To improve productivity and to continue building a sustainable business, our companies have closed or downsized some factories and consolidated production elsewhere in recent years. We fully recognise the impacts of these actions and work hard to mitigate the outcomes for employees and the wider community. These changes also enable us to rationalise our machinery and technology to establish a more cost-effective operational base for the future.
Read more at www.bat.com/production
We make significant investment into the development of our innovations and into research and development.We invest in our brands and the development of product innovations to drive growth. These innovations vary across our brands, brand variants and markets and our approach enables our companies to adapt their offers flexibly to local preferences. Our guiding focus when designing innovations is on relevance to the consumer, speed to market and the ability to continuously improve our products. We also invest significantly in our efforts to develop potentially reduced-harm products that will be accepted by consumers and will be recognised by scientific and regulatory authorities.
Read more at www.bat.com/innovation
We have a successful marketing strategy based on innovation, responsibility and consumer choice.Our balanced brand portfolio, including our four Global Drive Brands – Dunhill, Kent, Lucky Strike and Pall Mall – is designed to meet key consumer needs, especially in our strategic consumer segments – Premium, Adult Smokers Under 30 (ASU30) and Fresh Taste. Our marketing is driven by an excellent understanding of the consumer and by sticking to the marketing fundamentals that are appropriate to our products. We market in ways that allow us to satisfy consumer preferences, while responding to reasonable stakeholder expectations about how we should market tobacco products wherever we operate.
Read more at www.bat.com/marketing
We work with our retail partners to ensure that they can profitably meet the expectations of adult smokers.Our routes to market are a critical enabler of our growth strategy. They allow us to quickly roll-out innovations on a global scale and to fully meet consumer demand. We continuously review our routes to market to ensure we remain competitive and this includes our relationships with wholesalers, distributors and logistics providers. Our direct to store sales (DSS) are often the most effective way of serving retailers and building business partnerships. DSS allows us to create shared value throughout the sales and distribution process and provides a direct commercial link to our most strategic retail accounts.
Read more at www.bat.com/distribution