Tobacco Companies Rely on Asian Markets

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British American Tobacco has low sales dependence on Europe which makes it less vulnerable to volume reduction. Europe represents just 1/10 of the total sales. Major company’s sales come from emerging markets.  Despite lower demand cycles, the British American Tobacco managed to raise its revenue by 5 percent in the long-term perspective.

British American Tobacco, the Lucky Strike maker,  has entered again the Myanmar market through a mixed enterprise with IMU company. Some time ago the tobacco company had a top position on the Myanmar market and now it wants to rebuild it.

In fact, British American tries to conquer the Asian markets which are not touched by crisis. India, Laos,  Myanmar, China, Thailand give the company a perfect opportunity to increase its sales along with its market share in Asia. Besides this, the tobacco company is seriously investing in tobacco alternatives which may lead to a quick decline in tobacco use worldwide.

In its turn, Imperial Tobacco is also experiencing the headwinds on the European market which suffers economic crisis, strict government regulations and high taxes. Company profits dropped by 6.5 percent, with a 2 % decrease in revenue. The company understands that for some time the market backdrop would remain inflexible, Imperial Tobacco is applying for reduction of expenses and a slight dip in its investments to increase margins.

Imperial Tobacco was more concentrated on the European market, therefore the company volumes were reduced with a 5.9 percent shipment decline.

Now the company is looking for new opportunities on the developing markets. It counts on price increases and growth in these markets in order to cmpensate declining tobacco use and government restrictions, particularly in Western Europe and North America.

British American Tobacco gives a better dividend than its competitors. The dividends have been increasing at a safe ratio due to sustained profitable operations in emerging markets.

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