Tobacco companies have survived an onslaught on their operations
through innovation, expansion and distribution, a new report indicates.
A
December 2017 report by Genghis Capital says the industry has survived
also due to its intimidation and threats to “weak” governments.
Tobacco
makers have turned to innovation by introducing new products to the
market to boost brand performance and meet health standards while
maintaining their customers’ loyalty. In Kenya, the innovations include
e-cigarettes.
“We see this (innovation) as the most
effective survival tactic as the global onslaught on tobacco
continues... Players are coming up with ‘reduced-risk’ products such as
smoke-free cigars, heat-not burn devices, gum and lozenges among other
products,” says the report.
Phillip Morris
International, an American global cigarette and tobacco company with
products sold in over 180 countries outside the US, has for instance
launched IQOS devices (heat-not burn devices) while British American
Tobacco has Glo and Japan Tobacco has Ploom Tech.
These
companies also have other technologies which allow smokers to change
the taste of cigarettes while maintaining freshness after the pack is
opened. The report further said that research has played a big part in
keeping the industry at pace with change in regulations and customer
preferences.
“This investment in research and innovation will likely be
transferred to regional subsidiaries as most of the markets continue
implementing strict regulations on traditional cigarettes,” read the
report. The World Health Organisation (WHO) has, however, raised concern
over tobacco products manufacturers’ penetrating and upscaling their
operations to the developing world such as Africa, where the number of
smokers is predicted to double by 2025.
WHO estimates
that by 2025, smoking rates will go up in 17 of the 30 Africa-region
countries from their 2010 levels. In Kenya, smoking rates in both men
and women is set to rise to 4.06 million in 2025 from 3.17 million in
2010.
Kenya
produces about 16 million cigarette pieces annually, placing it first
among its peers in East Africa. On intimidation, BAT
has
been accused of threatening eight African governments with lawsuits in a
bid to block or dilute new regulations to limit smoking harm.
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