Click to enlarge.. BAT factory in Nairobi, Kenya
- photo/FREDRICK ONYANGO..
August 4, 2010 - Nairobi — British American Tobacco (Kenya) is diversifying into the export of semi-processed tobacco after investing Sh350 million (4,377,736.25 USD) in a processing plant to increase its revenue sources.
The firm, which begun exporting the leaf this month, has plants in South Africa, Nigeria, Turkey and Kenya serving its Middle East and African markets.
It plans to leverage on the plants in both the East African Community and Common Market for Eastern and Southern Africa trading blocs.
"We are targeting the trading blocs since we are placed strategically in the region in terms of the processing plants that are available," Mr Lawrence Kimathi, finance director told the Daily Nation.
The export business will be crucial for the firm, which has seen its domestic market shrink over the past four years. In the first half of 2010, the firm only managed to grow its market by 1.5 percent.
According to Mr Kimathi who was speaking on the sidelines of the firm's investor briefing in Nairobi, the initiative is expected to break even in three years. "We expect that this area will be about 40 per cent of our portfolio and pay back on the investments to come in the third year," he noted.
Restricted by the Tobacco Control Act, the company grew its sales by six percent in the period. BAT Kenya has declined to support charity organizations because of tobacco control laws.
Reference: Kenya: BAT Shifts Focus to Export of Tobacco Leaves, Joseph Bonyo, 8/3/2010.
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