Cigarette-maker BAT beefs up manufacturing plans in PH

MANILA, Philippines – Cigarette-maker British American Tobacco (BAT) is planning to put up its own factory in the Philippines either in 2014 or 2015, its top official said.

BAT Philippines general manager James Lafferty said the planned factory is in addition to the company’s $200 million investment it committed when it was pushing for the passage of the sin tax reform law.

“We will need a factory here at some point. We’re still studying the factory but it will be on top of the $200 million (investment),” he said in an interview.

He said the company is studying options where to put up the factory and what business operations will be pursued.

“There’s no location yet,” he said, adding the options for the factory may include acquiring an existing one in the market, putting up a distribution site, or a major manufacturing factory.

He said the planned Philippine factory can complement and may even compete with BAT’s manufacturing plant in Malaysia.

The $200 million investment commitment, on the other hand, comprises the company’s 5-year investment plan, with the initial $50 million to be spent in beefing up product distribution and employing additional people by end-2013.

He said that since the implementation of the excise tax reform law in January, the new players in the industry, including BAT and Japan Tobacco Inc., have strengthened their presence and introduced new brands.

“This is the beauty of free market,” he said.

The company is expecting stronger sales performance this year after failing to meet its 150 million cigarette sticks sales in 2012 since it was focused on the development of the then sin tax bill, according to Lafferty.

BAT is the maker of Lucky Strike brand and about 300 more cigarette brands worldwide.

Deadly sin tax?

Robert Eugenio, BAT Philippines head of corporate and regulatory affairs, meanwhile, debunked earlier claims that the sin tax law would kill the business of tobacco farmers.

“If they say we killed the tobacco industry, they should go to the north and look at how they are performing. They’re (the critics) wrong on everything,” he said.

President Aquino signed in December 2012 Republic Act No. 10351 or An Act Restructuring the Excise Tax on Alcohol and Tobacco, prescribing higher tax rates on tobacco and alcohol products.

The law took effect on January 1, 2013. – Rappler.com