[Intl-tobacco] Korea: BAT Hopes to Produce Cigarettes Locally

[Robert Weissman]

BAT Hopes to Produce Cigarettes Locally
by Nho Joon-hun / Staff Reporter
Source: Korea Times, Monday, 1/15/01

British American Tobacco (BAT), the multinational producer and marketer of
such popular brands as Dunhill and Finesse, is looking at the possibility
of launching production right here in Korea.

  ``We are a localized company and we would like to begin producing some
of our brands here within a few years when deregulation takes place,''
said BAT Korea president Jon Taylor.

  While legislators have been against allowing foreign companies to
produce in Korea as a means to protect local farmers, a draft bill for
revision is now pending at the National Assembly.

  Producing locally will be yet another unique aspect of BAT, which has
been setting some new standards for tobacco importers in Korea, such as
end-to- end direct marketing.

  ``There are additional costs involved in employing marketing and
distributing personnel, but the benefits more than compensate for any such
expenses,'' said the Australian executive, who has been in the business
for more than 20 years.

  The new business strategy has meant that the number of point-of-sales
has increased from the previous 20,000 to 40,000, and Taylor is planning
to recruit another 80 marketing personnel to further expand BAT's presence
in Korea.

  ``The financial crisis caused the market share of importers to fall from
12.5 percent to just 4 percent, but we are now back to around 10
percent,'' said Taylor.

  The swift recovery in the local market presented Taylor and his team
with a golden opportunity to seek sharp market penetration with brands
like Dunhill Lights, now the fastest-growing foreign brand in Korea.

  ``The merger between BAT and Rothmans International gave us Dunhill
Lights.  In the past, we had the market position but not the right
product, but we now have Dunhill Lights,'' Taylor said.

  With the right blend of unique marketing techniques and products, Taylor
is confident that BAT Korea will secure about 3 percent of the local
market this year, up from last year's 2 percent.

  The popularity of Dunhill Lights and other BAT products, interestingly
enough, is occurring in a country where imported goods often have a tough
time arousing consumer demand.

  And perhaps one reason why this is happening is the BAT philosophy,
which encourages the company to inform the public of the risks associated
with smoking.

  Through www.bat.korea.com, BAT Korea provides visitors with the latest
information on smoking, including how to quit, as part of its efforts to
educate the public.

  ``The site had 140,000 hits in the first three weeks that it was
launched and we continue to get about 25,000 visits per week. It is a
testimony to our commitment to letting consumers know the risks associated
with smoking and what choices they have for safer smoking,'' Taylor said.