BAT to push through with $200-million investment, mulls PH cigarette manufacturing plant

MANILA – Following the successful passage of the sin tax reform legislation, British American Tobacco (BAT) is pushing through with its $200 million commitment to invest in the Philippines over the next five years.

BAT general manager James Lafferty made this announcement Monday during a press briefing where he also announced that the cigarette maker will finalize a study this year that will determine the viability of establishing a manufacturing plant in the Philippines. The company already has a plant in Malaysia.

The Philippine tobacco industry is a near monopoly of Philip Morris Fortune Tobacco Corp (PMFTC), which controls 90 percent of the domestic market. The joint venture between Philip Morris and Lucio Tan-owned Fortune Tobacco is also the Philippines’ biggest exporter of cigarettes.

Despite PMFTC’s monopoly position, BAT is aiming to increase its market share in the 100-billion stick country, Lafferty said.

“The Philippines is a future growth channel. With the 6.6 percent GDP growth, you’re a star in Asia. I’m hoping the trend will continue,” he said, referring to the growth in the country’s gross domestic product last year, which exceeded the government’s 5-6 percent target.

“It’s nice if the President [Benigno Aquino III] can do two terms,’ Lafferty said.

BAT pulled out of the Philippine market in 2009, but reopened its operations in February 2012 as the Aquino administration committed to level the playing field.

Lafferty, who used to head the Philippine operations of Procter & Gamble, said BAT could expand its market share under its five-year investment plan. The company, which sells the Lucky Strike cigarette brand, had backed the government’s sin tax reform legislation.

BAT is buying 5 percent of the Philippines’ tobacco output, which the company uses to blend in different cigarette products. For this year, the country’s tobacco production is projected to reach 80 million kilos.