BAT Zimbabwe reports drop in volumes

Source: BAT Zimbabwe reports drop in volumes – The Zimbabwe Independent July 26, 2016

BRITISH American Tobacco (BAT) Zimbabwe on Tuesday reported a 23% drop in revenue to $16.8m following a 21% decrease in sales volumes as economic fundamentals continue to wane.

Cigarette consumption is normally regarded as inelastic, but this has not been the case in Zimbabwe where disposable incomes are not enough to cover the necessities.

Analysts said the 21% drop in volumes points to a distressed consumer, something which was confirmed by managing director Clara Mlambo, who said the trading environment remained constrained during the period.

“The trading environment was characterised by weak consumer demand and an accelerated liquidity crunch, driven by the generally weak macro-economic performance,” said Mlambo.

BAT said overall cigarette volumes for the local market had also declined compared to the same period in 2015.

Going forward BAT said it will continue to invest in Zimbabwe, both through its commercial business and through purchases of a significant proportion of the national tobacco crop.

Mlambo said BAT Global purchases between 10% to 12% of Zimbabwe’s tobacco output, which reached 190 million kilogrammes in 2015 and has already reached 183 million kilogrammes in the current selling season.-Fin24