10.4 The tobacco companies operating in Australia

The tobacco market in Australia is dominated by three major companies, of which the largest is British American Tobacco Australia. In 2009, the three tobacco companies had combined total revenue of more than $2.8 billion and employed about 2100 people (Table 10.4.1).

Table 10.4.1
Tobacco companies operating in Australia: summary

 

BATA

PMA

ITA

Rank (within Top 1000 companies in Australia)

195

420

727

Total revenue ($m)

1667.9

754.7

405.0

Net profit after tax ($m)

369.8

284.4

n/a

% change in net profit from 2008

-18.8%

20.1%

n/a

Shareholders' funds ($m)

608.7

319.7

n/a

Total assets ($m)

3002.7

546.2

n/a

Number of employees

11001

7002

317*3

Volume share cigarettes

45.7%1

37.32

16.23

Volume share cigars

24.1%

n/a

n/a

Volume share smoking tobacco

35.4%

n/a

61.6

* 2007 figure

Source: BRW data 20094

10.4.1 British American Tobacco Australia Limited

British American Tobacco Australia (BATA) is a wholly owned subsidiary of British American Tobacco.5 British American Tobacco is a publicly listed company on the London Stock Exchange.

BATA was created in 1999 by the merger of WD and HO Wills Holdings Ltd (controlled by British American Tobacco) and Rothmans Holdings Ltd.6 The merger of the two Australian companies mirrored the international merger of British American Tobacco with Rothmans International, making the newly formed BATA the largest tobacco company operating in Australia. The then Chairman of Wills (and former Premier of New South Wales), Mr Nick Greiner, subsequently became Chairman of BATA.6 The new corporate entity soon realised higher profits due to sales growth, cost reductions and distribution advantages arising from rationalisation of resources.7

The head office and main manufacturing base for BATA are located in Eastgardens, in suburban Sydney.5 BATA's printing and packaging is contracted out to Anzpac Services, which was a wholly owned subsidiary of BATA before it was sold in October 2008 to the Singapore-based New Toyo International Holdings for $60 million. This sale incorporated a seven-year agreement for Anzpac to supply British American Tobacco with cigarette cartons for production in Oceania, Malaysia, Singapore and Vietnam.8

The British American Tobacco Australasia area covers Australia, New Zealand and the Pacific Islands. Taking into account the wider region, BATA employs a total workforce of about 2200, who produce just over 18 billion cigarettes a year, with additional manufacturing facilities in Papua New Guinea, Fiji, the Solomon Islands and Western Samoa. BATA also produces tobacco goods for export throughout other Pacific Island nations, through its own export division.5 BATA imports some tobacco products, and is under contract by Imperial Tobacco Australia to manufacture a range of products (see Chapter 10, Section 10.4.3).

Since BATA is wholly owned by its UK parent British American Tobacco, financial data specific to BATA do not need to be made publicly available. In British American Tobacco's annual company reports, Australia is included in the Asian-Pacific region, for which results from New Zealand and the South Pacific, and Asian countries including Indonesia, Malaysia, Pakistan, Japan, Bangladesh, South Korea, Taiwan and Vietnam are pooled.9 According to the 2010 British American Tobacco annual report, 'Australia achieved strong profit growth through higher pricing and continued cost saving initiatives. Good performances from both Pall Mall and Winfield led to an increase in market share, although an ad hoc excise increase in May 2010 resulted in a drop in industry volumes'.9

Limited financial information for BATA is compiled and published annually as part of Business Review Weekly and IBISWorld's annual '1000 Index.' Information from recent Business Review Weekly reports is presented in Table 10.4.2. Because these data collapse the Asian-Pacific region, as do British American Tobacco's annual reports, it is not possible to isolate Australian performance. For the year 2009, Business Review Weekly ranked BATA at 195 out of Australia's top 1000 companies on the basis of total revenue, and 63 out of 1000 for net profit after tax.4

Table 10.4.2
British American Tobacco (Australasia Holdings)*, 2002–2009

 

2002

2003

2004

2005

2006

2007

2008

2009

 

Year ending December

Total revenue ($m)†

1232.5

1310.4

1325.7

1431.8

1476.7

1506.5

1595.4

1667.8

Profit after tax ($m)†

117.6

200.4

248.0

412.7

410.7

455.7

755.7

369.8

Share-holder's funds ($m)†

1681.9

1671.1

1294.5

1412.9

632.6

702.6

745.3

608.7

Total assets ($m)†

3034.3

2844.7

2852.5

3018.8

2962.1

3026.3

3156.9

3002.7

Number of employees*

2364

2009

2025

n/a

2300

n/a

n/a

2200

* Table includes data from all operations throughout the Asian-Pacific region

† Figures unadjusted for inflation

Sources: Business Review Weekly10,11,12,13,14,15,16,17,4 BATA5

BATA claims market leadership in Australia and the Pacific, with around 46% of market share in Australia, 75% in New Zealand and 100% throughout the Pacific Islands. BATA's major brands in Australia are Dunhill, Winfield and Benson & Hedges.5 British American Tobacco's annual reports since 200318–22 consistently allude to increasing profits in Australia, attributing this success to higher margins, reductions in overheads and improved supply chain efficiencies, and strong performances by its key brands, Winfield, Dunhill, Benson & Hedges and Holiday. Table 10.4.3 presents BATA's Australian brand portfolio.

Table 10.4.3
British American Tobacco Australia brands and products, 2011

Cigarettes

Benson and Hedges, Cambridge, Craven A, Dunhill, Holiday, Kent, Kool, Pall Mall, Rothmans, Stradbroke, Vogue, Wills, Winfield

Roll your own tobacco

Capstan, Holiday, Port Royal, Samson, Winfield

Cigars

Captain Black, Dunhill, Mercator, Schimmelpenninck

Smoking accessories

Ranch Filters ROLLIES and VENTTI Cigarette Papers

Source: The Australian Retail Tobacconist23

10.4.2 Philip Morris (Australia) Limited

Philip Morris (Australia) Limited is the Australian subsidiary of Philip Morris International, based in Lausanne. Philip Morris Australia was established in 1954, the first overseas affiliate to be set up by Philip Morris International.24 Philip Morris Australia's Australian head office and main manufacturing facility, which employs more than 200 people,2 are located in Moorabbin, a suburb of Melbourne, Victoria. The Australian headquarters provides support to Philip Morris interests in other countries in the Asian region, including Hong Kong, Japan, Malaysia, the Philippines and India.25 Philip Morris Australia's major brands include Longbeach, Peter Jackson, Marlboro and Alpine.

On the basis of market share, Philip Morris Australia is the second largest tobacco company in Australia.25 Since its delisting as a public company in 1992, Philip Morris Australia has had no formal requirements to publicly lodge annual reports or financial statements specifying results from its Australian operations. No Australia-specific information is reported in Philip Morris International's annual reports. However, limited information is available through the annual listings compiled by the Australian Business Review Weekly and IBISWorld. Data from these sources are presented in Table 10.4.4. In 2009, Philip Morris Australia was ranked 420 out of Australia's top 1000 enterprises on the basis of total revenue, and 83 out of 1000 for profit after tax.4

Table 10.4.4
Philip Morris Australia, 2002–2009

 

2002

2003

2004

2005

2006

2007

2008

2009

 

Year ending December

Total revenue ($m)*

615.8

633.1

655.0

635.4

623.3

676.8

700.7

754.7

Profit after tax ($m)*

121.2

155.2

187.1

193.4

172.6

226.2

236.7

284.4

Shareholder's funds ($m)*

275.4

315.2

335.6

431.4

403.4

260.3

28.7.6

319.7

Total assets ($m)*

591.8

563.4

670.2

644.6

627.5

465.8

498.2

546.2

Number of employees

753

732

735

745

691

n/a

n/a

700

* Figures unadjusted for inflation

Sources: Business Review Weekly 10,11,12,13,14,15,16,17,4

 

Table 10.4.5
Philip Morris Australia brands and products, 2011

Cigarettes

Alpine, Choice, GT, Longbeach, Marlboro, Peter Jackson, PJ Evolve

Roll your own tobacco

Longbeach, Marlboro, Peter Jackson

Cigars

Wings

Smoking accessories

Ventti Filters and Paper, Cricket Lighters

Source: The Australian Retail Tobacconist23

10.4.3 Imperial Tobacco Australia Limited

Imperial Tobacco Australia Limited is the smallest and most recently formed of the tobacco companies operating within Australia. Imperial Tobacco Australia was established to coincide with the merger of WD & HO Wills Holdings Limited and Rothmans Holdings Limited as British American Tobacco Australia. At the time of the proposed merger, concerns were raised about the likelihood for reduction in competition in the Australian marketplace, thereby potentially causing a breach of Section 50 of the Trade Practices Act 1974. The Australian Competition and Consumer Commission agreed to permit the merger to proceed, on condition that another tobacco company enter the Australian market. The UK-based Imperial Tobacco Group was invited to enter the Australian market and in September 1999, Imperial Tobacco Australia commenced operations.26, 27 As part of the agreement allowing the formation of British American Tobacco Australia, Imperial Tobacco Australia was sold a portfolio of cigarette, roll-your-own tobacco and cigarette paper trademarks previously owned by Rothmans or WD & HO Wills for the sum of $325 million. The purchase gave Imperial Tobacco Australia an opening market share of 17.1%.27

Imperial Tobacco Australia ranked third in cigarettes sales in 2009, with a volume share of 16.2%. Imperial Tobacco Australia dominates the roll-your-own tobacco category, where it had a 62% volume share in 2009.3 For the year 2009, Imperial Tobacco Australia was rated 727 out of Australia's top 1000 enterprises on the basis of total revenue.4 See Table 10.4.6 for financial information.

Table 10.4.6
Imperial Tobacco Australia, 2002–2009

 

2002

2003

2004

2005

2006

2007

2008

2009

($m)*

Year ending September

Total revenue ($m)*

271.4

306.7

342.7

367.9

386.5

358.0

370.1

405.0

Profit after tax ($m)*

27.2

36.5

47.7

53.2

2.7

5.9

217.2

n/a

Shareholder's funds ($m)*

62.4

97.5

67.7

73.2

25.1

34.3

38.0

n/a

Total assets ($m)*

128.5

161.8

146.2

158.8

176.7

203.6

230.1

n/a

Number of employees

261

274

278

299

317

317

n/a

n/a

* Figures unadjusted for inflation

Sources: Business Review Weekly 10,11,12,13,14,15,16,17,4

The head office for Imperial Tobacco Australia is located in the suburb of Baulkham Hills, north-west of Sydney. Regional offices operate in Melbourne, Adelaide, Perth and Brisbane. In 2007, Imperial Tobacco Australia employed 217 personnel. Imperial Tobacco Australia does not own manufacturing plant in Australia, but subcontracts British American Tobacco Australia to produce its Australian-made range of cigarettes and tobacco, including Horizon, Peter Stuyvesant and Escort. Additionally, Imperial Tobacco Australia imports a range of cigarettes and loose tobacco products from its international stable of brands, including Camel and Superkings.3

Table 10.4.7
Imperial Tobacco Australia brands and products, 2011

Cigarettes

Brandon, Camel, Davidoff, Escort, Horizon, JPS, More, Peter Stuyvesant, Superkings

Roll your own tobacco

Bank, Champion, Dr Pat, Drum, Escort, Golden Virginia, Horizon, Log Cabin, Peter Stuyvesant, Stockman's, White Ox

Pipe/Fine cut

Amphora, Dr Pat, Log Cabin

Smoking accessories

Papers, Rizla, and Tally Ho Papers Tally ho Filters, Tally Ho Cigarette Tubes, Tally-Ho cigarette maker machine

Source: The Australian Retail Tobacconist23

Recent news and research

For recent news items and research on this topic, click here (Last updated October 2016)      

References

1. Euromonitor International. British American Tobacco Australia Ltd. Tobacco - Australia. London: Euromonitor International, 2010 [viewed 25 June 2011] . Available from: http://www.euromonitor.com/tobacco

2. Euromonitor International. Local company profile, Philip Morris (Australia) Ltd. Tobacco - Australia, September. London: Euromonitor International, 2010 [viewed 31 March 2011] . Available from: http://www.euromonitor.com/tobacco

3. Euromonitor International. Local company profile, Imperial Tobacco Australia Ltd. Tobacco - Australia, September. London: Euromonitor International, 2010 [viewed 31 March 2011] . Available from: http://www.euromonitor.com/tobacco

4. Business Review Weekly and IBISWorld. The BRW 1000. BRW (Australia) 2011;33(3)

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6. British American Tobacco plc. Australian announcement. Merger of Rothmans Holdings Limited and WD & HO Wills Holdings Limited, 19 May 1999. London: British American Tobacco plc, 1999 [viewed 24 January 2008]. Available from: http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO52AFRT/$FILE/medMD52XFE8.pdf?openelement

7. Neil M. Tobacco group lifts profit. The Canberra Times, 2001:1 Mar. 15

8. ANZPAC Services. Australian packaging covenant. Smithfield, New South Wales: ANZPAC Services, 2010 [viewed 07 July 2011] . Available from: http://www.packagingcovenant.org.au/documents/File/Anzpac%20Services%20%28Australia%29%20Pty%20Ltd%20AP_10_15.pdf

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11. Business Review Weekly and IBISWorld. BRW 1000 Index. BRW (Australia) 2003;20 Nov

12. Business Review Weekly and IBISWorld. The BRW 1000. BRW (Australia) 2004;11 Nov:87-130.

13. Business Review Weekly and IBISWorld. BRW 1000. The List. BRW (Australia) 2005;10 Nov:77-123.

14. Business Review Weekly and IBISWorld. BRW 1000 List. BRW (Australia) 2006;9 Nov:28-98.

15. Business Review Weekly and IBISWorld. Australia's 1000 Biggest Enterprises. BRW (Australia) 2007;22 Nov:33-114.

16. Business Review Weekly. BRW 1000 REVENUE. BRW (Australia) 2008;30(46):58-77. Available from: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=35901081&site=bsi-live

17. Business Review Weekly. Top 1000 companies. BRW (Australia) 2010;32(3):24-40.

18. British American Tobacco plc. British American Tobacco Annual Review and Financial Summary Statement 2003. London: British American Tobacco plc,, 2004 [viewed 13 February 2008]. Available from: http://miranda.hemscott.com/ir/bats/ar_2003/main.htm

19. British American Tobacco plc. British American Tobacco Annual Review and Summary Financial Statement 2004. Addictiojn. London: British American Tobacco plc, 2005 [viewed 13 February 2008]. Available from: http://miranda.hemscott.com/ir/bats/re_2004/main.htm

20. British American Tobacco plc. British American Tobacco Annual Review and Summary Financial Statement 2005. London: British American Tobacco plc,, 2006 [viewed 13 February 2008]. Available from: http://miranda.hemscott.com/ir/bats/ar_2005/download/pdf/management_review_regional_summary.pdf

21. British American Tobacco plc. Annual Report and Accounts 06. Annual Review and Summary Financial Statement and Directors' Report and Accounts 2006. London: British American Tobacco plc, 2007 [viewed 19 January 2008]. Available from: http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO52AK34/$FILE/medMD6ZPCA4.pdf?openelement

22. British American Tobacco. Annual report and accounts 06. London: British American Tobacco, 2007 [viewed 17 August 2011] . Available from: http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO52AK34/$FILE/medMD6ZPCA4.pdf?openelement

23. Trademarks. The Australian Retail Tobacconist 2011;81(2: May-July):18-20.

24. Philip Morris International. Australia. Country overview. Moorabin, Australia: Philip Morris, 2011 [viewed 9 July 2011] . Available from: http://www.pmi.com/marketpages/pages/market_en_au.aspx

25. Philip Morris International. Corporate website. New York: Philip Morris International, 2008 [viewed 8 January 2008] . Available from: http://www.philipmorrisinternational.com/pmintl/pages/eng/default.asp

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27. Imperial Tobacco Group PLC. Australian acquisition. News release, 27 September 1999. London: Imperial Tobacco Group PLC,, 1999 [viewed March 2008] . Available from: http://www.imperial-tobacco.com/index.asp?page=78&newsid=47&type=18&year=archive

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