Our company reached the US in the 1920s with the acquisition of Brown & Williamson
In its first quarter century, British American Tobacco expands rapidly. From Canada to China, the company has from the start a single objective: to seek market leadership in all countries where a market exists.
With operations around the world, the company finally reaches the US in the 1920s with the acquisition of a small North Carolina company, Brown & Williamson.
As trading conditions deteriorate after the Wall Street Crash in 1929, the 1930s sees consolidation across the company, with several distribution networks becoming fully-fledged subsidiaries.
On 29 September 1902 the UK’s Imperial Tobacco Company and the American Tobacco Company of the United States form a joint venture, the British American Tobacco Company, in a bid to end an intense trade war.
Under the agreement, the two companies will not trade in each other’s domestic markets and acquire the right to use each other’s brands and trade marks in their own territory. Imperial Tobacco's and American Tobacco’s businesses outside the ‘home’ markets of the UK and US are transferred to British American Tobacco, giving the new company operations in countries as diverse as Canada, Japan, Germany, Australia, South Africa and China.
James ‘Buck’ Duke, an austere, self-taught commercial genius, becomes the company’s first chairman. His strategy is to devise a superior product, hire the best people to make it, price it as low as possible, and mechanise, organise and merchandise.
The first decade is a chronicle of expansion: to the West Indies in 1904; to India, Ceylon and Egypt in 1905; Holland, Belgium, Sweden and Norway in 1906; Finland, Indonesia and East Africa in 1908; and Malaya (now Malaysia) in 1911.
By 1910, British American Tobacco’s sales are more than 10 billion cigarettes. Profits grow correspondingly quickly.
The first chairman of British American Tobacco, James 'Buck' Duke
BAT becomes British
By 1911, the American Tobacco Company divests its shares in the joint venture. British American Tobacco is listed on the London Stock Exchange and British investors acquire most of its American parent's shares. The company is now free to conduct its business independently throughout the world, except in the UK where territorial agreements remain with Imperial.
Across the South Atlantic, the company is busy entering new markets. In 1913, a local tobacco manufacturer in Argentina, Bozetti & Co. is acquired. One year later, Brazilian company Souza Cruz is purchased – today, one of the Group’s leading subsidiaries.
First World War 1914–1918
With the coming of war in 1914, the additional demand from the armed forces for tobacco stretches the company’s manufacturing capacity to the limit. In 1915, British American Tobacco cigarette sales total 25 billion.
The First World War creates a unifying corporate culture from what had previously been a disparate Group of companies, while the recruitment of women to replace the men who had gone to war changes the workplace forever.
The post-war world
British American Tobacco’s enormous market is the fruit of continuing expansion. In 1921, Cigarrera Bigott Sucs is formed in Venezuela and, in the following few years, acquisitions are made in Chile, Mexico and Central America.
Duke resigns as chairman in 1923. His successor is Sir Hugo Cunliffe-Owen, another powerful, decisive personality. One of Sir Hugo’s first moves as chairman is to acquire, in 1925, the overseas business of Ardath Tobacco and with it the rights of the State Express brand.
British American Tobacco moves into the US market in 1927 with the acquisition of a small North Carolina company, Brown & Williamson.
By 1927 – the company’s 25th anniversary – it is recognised as one of the UK’s leading companies, with 120 subsidiaries and more than 75,000 employees worldwide. It has gained a toehold in the American market and has absorbed its only international rival, Ardath; British American Tobacco is well established in every continent of the globe and profits are running at more than £6 million annually.
A decade of consolidation
With tough trading conditions created by the Wall Street Crash in 1929, territorial expansion slows during the 1930s.
Despite the economic downturn, British American Tobacco companies have factories in most countries without government monopolies by 1932. That same year, company depots develop independent distribution networks, which become fully-fledged subsidiaries.Leaf-growing and manufacturing operations are established in India, China, Brazil and Nigeria and Haus Bergmann is acquired in Germany.