Felicio Ferraz, General Manager, British American Tobacco, Caucasus

British American Tobacco shuts its offices in Georgia

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The FINANCIALBritish American Tobacco plc (BAT)  an American British multinational company that manufactures and sells cigarettes, tobacco, and other nicotine products announced it will close its offices in Georgia from February 2021. 

BAT, established in 1902, is headquartered in London, England. The company is presented in Georgia since 2000. BAT is the winner of Golden Brand in CSR activities. 

The tobacco distribution sector was hardly affected by new rules imposed by the Georgia government and later COVID-19 pandemic. 

A new law on Retail display ban (RDB) of tobacco products comes into force as of January 1, 2021. Retailers claim that in the current situation it’s impossible to meet new requirements. 

Two years ago British American Tobacco Won a $ 100 Million Dispute with the Georgian government. 

The company asserts that paragraph 2 of article 5 of Georgian Law on Tobacco Control is unconstitutional as it bans sales of tobacco products under cost in Georgia. Details were published by radio Commersant: The action reads that OGT, a Georgian cigarette manufacturer, has applied the mentioned article against British American Tobacco. As a result, the international company was ordered to pay a fine in the amount of GEL 100 537 172.

In 2018, BAT’s competitor was claiming that under the Georgian Dream leadership its cigarette company OGT suffered $100 million in losses after multinational company British American Tobacco, “which was lobbied by the Georgian Dream government officials”, violated the laws on competition and tobacco control.

BAT is facing difficult challenges worldwide as some countries have banned the display of tobacco products in shops. Instead of being on display, the products are hidden under the counter, or behind curtains or screens, making it hard for customers to know what is available. These bans are based on claims that displays encourage people to smoke – especially children – and also demotivate smokers from quitting.

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Company said, there’s no clear evidence that display bans have any significant effect on smoking rates – either among children or adults. In Ireland, the first studies conducted after the introduction of the 2009 display ban suggested there was no observable change in adult smoking prevalence.

With tobacco products hidden from view, consumers may struggle to tell whether their purchases are legitimate or black market products, company said.

“For smaller retailers, display bans could mean being hit with potential refitting costs. It could also mean potentially losing out to larger competitors, as consumers might assume larger stores are more likely to stock their favourite brand”.

“Display bans obstruct and distort free market competition among tobacco companies and their right to communicate with adult consumers about legally available products.

On a purely economic basis, display bans could even lead to increased consumption by encouraging adult smokers to choose products solely on price. A switch to a cheaper brand – or cheap illegal cigarettes – could result in people smoking more”.

BAT said it was creating a “more efficient, agile and focused” company as it focused on e-cigarettes and other new categories of product.

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