Puffed out: British American Tobacco to exit PH market
The second largest tobacco company in the world is packing up and leaving Philippines for the second time around amid an increasingly challenging business environment.
British American Tobacco is shutting down its Philippine operations by the end of the year after its failed attempt to acquire Bulacan-based cigarette firm Mighty Corp. from the Wongchuking family, Manila Bulletin reported.
“ We have been operating in a difficult environment for some time. Given our small-scale operation, the highly consolidated nature of the market in the Philippines and the lack of inorganic opportunities, we have concluded that it is not sustainable for us to maintain a presence in the market. Consequently, we will be closing our current operations by the end of the year,” BAT said in a statement.
The maker of Lucky Strike and Dunhill brands has been struggling to make a dent in the multi-billion peso Philippine tobacco market, dominated by Philip Morris Fortune Tobacco Corp., a joint venture between global giant Philip Morris and taipan Lucio Tan.
Following its return to the Philippines in 2012, BAT only managed to secure a meager one percent of the market.
To survive the cut throat competition in the industry, BAT tried but failed to close a deal with Mighty, the Philippines’ second largest tobacco producer. It lost to Japan Tobacco which acquired Mighty in a deal worth nearly $1 billion.
Sources, however, said BAT was Mighty’s preferred buyer and that politics just got in the way.
The London-based cigarette firm also carries the brands Kent and Pall Mall.