British American Tobacco's Malaysian unit is banking on Dunhill cigarettes to reverse declining sales in Southeast Asian countries.
British American Tobacco (Malaysia) general manager Nedal Louay Salem said a rule change last year allowed the company to start selling Vuse brand e-cigarettes in Malaysia, giving the tobacco company a potential local market. The company has doubled in size, so the company has a lot of confidence in its Vuse brand.
In an interview with Dow Jones Newswires, Salim said: "Our goal is to make Vuse in e-cigarettes what Dunhill is in cigarettes. Our goal is to become the leader in Malaysia. The largest vaping e-cigarette brand.”
He said these efforts have paved the way for increased sales. “In 2024, our sales will definitely be better than in the past.”
As the maker of Dunhill, one of the country's most popular cigarettes, British American Tobacco faces tough challenges in Malaysia. Increasing competition from unregulated vaping and black market tobacco products has cut into the dominant share of traditional cigarettes.
The company's profits have continued to decline for much of the past decade, with its share price down about 76% in the past five years; this year, the company's shares have fallen 2.1%, taking BAT Malaysia's market capitalization to below $550 million. .
Analysts expect BAT Malaysia's sales to reach 2.36 billion ringgit (about 496.8 million U.S. dollars) in 2023 when it reports earnings on Tuesday night, down from 2.6 billion ringgit in 2022 and 2.64 billion ringgit in 2021. .
Salim said that in the short term, the company's bottom line is likely to remain under pressure as it will invest in "the right mix of the right channels" to gain market share in smoking accessories following the launch of Vuse in Malaysia last August.
It is crucial for BAT to increase Vuse's sales to the same level as Dunhill cigarettes. According to its 2022 annual report, the Dunhill brand of British American Tobacco's Malaysian branch has a 32% share of the Malaysian tobacco market, accounting for 62% of the country's high-end market.
At the same time, the company plans to continue refining its traditional products. Salim said consumption of BAT's affordable Luckies cigarettes, launched last year, has grown rapidly at a time when inflation risks are high, especially with subsidies set to be cut and taxes increased.
Salim said BAT also has a series of new products planned to be launched on the market in the next nine months. He added that the expansion into the e-cigarette field supports the company's intention not to delist and privatize; market analysts had previously believed that delisting and privatization was possible if the company's stock price fell for a long time.
"We have a huge opportunity ahead of us," he said. "That's the focus of the company, not privatization."
