Our business model
Our business model is designed to deliver sustainable growth in earnings. It is consumer-led and science-based.
Our success depends on really understanding the different profiles and preferences of our consumers. We invest in gathering comprehensive insights into smokers’ preferences and buying behaviour. This drives our marketing and allows us to promote our products to adult tobacco consumers in ways that satisfy their preferences, while responding to stakeholder expectations about how we should market our products.
We have a significant interest in tobacco growing and we work directly with around 70 per cent of the farmers who supply our leaf. We manage our whole supply chain responsibly and work with our suppliers to create a shared understanding of our social, environmental and economic impacts. This enables us and our suppliers to manage risks better, while ensuring that we are agile and flexible, so that we can use our resources as effectively as possible.
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. Our companies have closed or downsized some factories and consolidated production elsewhere in recent years. These changes enable us to rationalise our machinery and technology to establish a more cost-effective operational base for the future.
Our international reach and well-developed distribution channels are critical enablers of our growth strategy, allowing us to roll out innovations on a global scale. We continuously review our route to market to ensure we remain competitive. This includes our relationships with wholesalers, distributors and logistics providers, as well as our direct to store sales operation, which is often the most effective way of serving retailers and building business partnerships.
For over 50 years, we have had an extensive scientific research programme. More recently, we have been focusing research on modified cigarettes and low-toxicant smokeless tobacco products. We are committed to helping develop the scientific and regulatory framework we need to deliver a varied portfolio of products in the future, including alternative regulatory-approved nicotine products, to meet the evolving needs of adult smokers.
We have a successful brand marketing strategy based on innovation, responsibility and consumer choice. We recognise that our business starts with our consumers and our brand portfolio is designed to meet key consumer needs, especially in our strategic consumer segments. Our four Global Drive Brands – Dunhill, Kent, Lucky Strike and Pall Mall – and our other international brands account for more than 50 per cent of our total cigarette volumes.
We make significant investment in our brands and the development of superior, differentiated products to drive growth. Our product and packaging innovations, such as Convertibles and Reloc, vary across our brands, brand variants and markets and our approach enables our companies to adapt their offers flexibly to local preferences. Our focus when designing these innovations is on relevance to the consumer and potential speed to market.
We employ more than 56,000 people worldwide – from securing our leaf supply through production and distribution to our efforts to develop reduced-risk products. Our workforce is strongly multi-cultural and we have a devolved structure, with each local company having responsibility for its operations. We value our employees’ talents and diverse perspectives and recognise their critical role in achieving the goals we set for our business.