british american tobacco p.l.c. sustainability report 2010 - Our economic impact

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Sustainability Report 2010

As the world’s most international tobacco business, British American Tobacco’s economic contribution stretches from a local to global level.

We sell brands in more than 180 markets worldwide, with 45 cigarette factories based in 39 markets. Our Group employs more than 60,000 people, with many more people indirectly employed through our supply chain, including suppliers, contractors, distributors and retailers, as well as over 200,000 farmers who grow the tobacco leaf we buy.

Net sales plus revenues from financial investments and sales of assets
Economic value distributed
£7,251m Operating costs
Payments to suppliers, non-strategic investments, royalties and facilitation payments
£2,550m Employee wages and benefits
Total monetary outflows for employees (current payments, not future commitments)
£2,910m Payments to providers of capital
All financial payments made to the providers of capital
£30,220m Payments to governments
Tax paid including excise taxes
£15.4m Community investments
Voluntary contributions and investment of funds in the broader community (includes donations)
Economic value retained
Calculated as revenues less economic value distributed (investments, equity release, etc.)

Economic impact studies

Our Group companies commission economic impact studies on an ad hoc basis to meet local business needs. In 2010, three of our subsidiaries reported commissioning assessments on how they contributed to the longer-term prospects for economic development in Australia, Pakistan and Poland.

Our company in Australia commissioned two studies, conducted by PricewaterhouseCoopers Australia, to assess Australia’s illegal tobacco market and the economic contribution of the tobacco industry in Australia. The first study included research into the economic contribution of the legitimate tobacco industry in Australia and showed that in 2008 its sales represented a contribution of A$3.6 billion (£2.14 billion) to Australia’s GDP. In 2008/9, A$5.62 billion (£3.34 billion) was collected in excise revenues of tobacco products, representing 2 per cent of Australia’s taxation revenue.

The second study showed that around 73,000 jobs are directly or indirectly created by the tobacco industry in the country. However, it also highlighted the negative economic impacts of the use of tobacco products, with increased health and other social costs. Health costs associated with tobacco use in Australia are estimated to be A$318 million (£189 million) per year.

In 2010, our company in Pakistan commissioned an update to its 2008 study by Neilson research agency to evaluate employment created, revenue generated, taxation and wider economic contributions within the Northwest Frontier Province. Key highlights showed that the tobacco industry generated employment (direct and indirect) among 80,000 farmers, and an income of PKR 8.5 billion (£64.6 million). In the manufacturing sector, it created direct and indirect employment of 70,000 people, generating a total income of PKR 10 billion (£75.9 million). In the distribution and retailing sector, direct and indirect employment was generated for 200,000 people, with an income of PKR 12 billion (£91.1 million). The industry’s contribution to the government in duty and taxes was valued at PKR 50 billion (£379.7 million).

Our company in Poland commissioned a study, carried out by the Polish Employers Organisation, on the tobacco sector within the national economy of Poland. The study shows that the tobacco industry directly employs more than 60,000 people in agriculture and tobacco processing and is an indirect supporter of more than 500,000 jobs for 120,000 retailers and wholesalers. In 2009, the tobacco industry generated 9.1 per cent of the annual tax revenue of the Polish state budget.

In 2010, an independent economic impact assessment was carried out by NKC Independent Economists on ‘The role of burley and tobacco in African economies and the expected impact of a decline in the crop’s production’. The report shows that more than 3.6 million people in Malawi, Mozambique, Uganda, Zambia and Zimbabwe are directly dependent on tobacco production for their livelihoods. A minimum of 12 million people are directly and indirectly affected by developments in the countries’ tobacco sectors.

The report was conducted in response to recommendations to restrict or prohibit the use of ingredients in tobacco products by the World Health Organisation’s Framework Committee on Tobacco Control. You can read more about this in the marketplace section.