Africa and Middle East
Where we are located
The region includes the following major markets:
- The Gulf Cooperation
- South Africa
Profit from the Africa and Middle East region grew by £134 million to £858 million in 2010. At constant rates of exchange, profit would have improved by £69 million, or 10 per cent, mainly driven by Nigeria and the Gulf Cooperation Council (GCC). Volumes were 2 per cent lower at 124 billion, following declines in Turkey, Iran and South Africa. However, these were partially offset by increases in the GCC, Egypt and Nigeria.
In South Africa, market share grew following strong performances by Peter Stuyvesant and Kent, aided by the successful migration of Courtleigh to Dunhill. Volumes were down after an almost doubling of illicit trade. However, the profit impact of this was mitigated by increased pricing and cost reduction initiatives, helped by a stronger exchange rate.
Nigeria achieved strong volume growth. Coupled with higher prices and cost reductions, this led to an impressive profit performance. A reduction in illicit trade, rural market expansion and effective distribution across all channels contributed to volume growth. Market share also grew strongly, with excellent performances from Dunhill and Pall Mall.
In the GCC markets, volume, market share and share in the Premium segment grew strongly, with Dunhill and John Player Gold Leaf the main contributors. Profit was significantly higher, benefiting from volume growth and stronger pricing.
In the rest of the Middle East volumes were lower, although this was partially offset by a strong performance in the Levant. Profit was lower as a result of a decline in volumes and higher brand investment in the Levant.
An aggressive excise-driven price increase in Turkey in January 2010 led to an almost doubling of illicit trade. Nevertheless, profit rose as price increases, favourable exchange movements and reduced production overheads offset the impact of lower volumes. The brand portfolio acquired in the Tekel transaction was particularly affected by the growth in illicit trade and competitor pricing.
In Egypt, volumes and market share continued their impressive growth trend, despite the excise-led price increases in July. However, profit was adversely impacted as the excise increase was only partially recovered through higher prices. Rothmans had a good performance, expanding its leadership position among international brands.