british american tobacco p.l.c. sustainability report 2009 - International Marketing Standards in Nigeria

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SUSTAINABILITY REPORT 2009

Current Nigerian law on selling tobacco products is not comprehensive and for British American Tobacco Nigeria, implementation of the Group’s International Marketing Standards (IMS), which are stricter than the current regulation, has strengthened the company’s approach to responsible marketplace practice.

The local environment provides many challenges. For example, there are no legal restrictions on the age at which people can buy cigarettes. It is also still culturally acceptable for children to be sent to buy cigarettes on behalf of adult smokers.

Disposable income in Nigeria is low, with over 70 per cent of the population on incomes of below US$1 per day (£0.64). The market is highly fragmented, characterised by small traders with limited financial resources and many street vendors. Many products are therefore sold in the smallest units possible and dispensed separated out from packaging that would be the normal consumer purchasing size in other countries. Detergent, tea, sugar and coffee are examples of consumables often sold in this way. This problem is exacerbated by the fact that the retailer can maximise profit margins by selling in this way.

Cigarettes are no exception to this and while British American Tobacco Nigeria only supplies cigarettes in whole cartons, retailers can make margins three or more times higher by opening the packs and selling single cigarettes.

British American Tobacco Nigeria works hard to prevent this through awareness raising, trade loyalty schemes and sanctions. However, this reaches only those retailers with whom the company trades directly or through its distributor – about 12,000 outlets – while the total number of retailers in Nigeria could be as high as 300,000.

As well as influencing the retailers it works with directly, the company also supports the enforcement of regulation about this in the wider retailer universe.

British American Tobacco Nigeria’s efforts in responsible marketing practices are reflected in its marketing management procedures. A monthly cross-functional meeting is held where senior management reviews proposed marketing activities three months ahead of planned implementation. These reviews, coupled with training of the company’s marketing employees, distributors and retailers, help to ensure that any marketing materials and activities comply with both local laws and our IMS, as well as taking into account any concerns raised by distributors and retailers.