Flora Okereke, Global Market Director of British American Tobacco (BAT), recently spoke with Tobacco reporter about the significant changes taking place in the industry. In the interview, she shared her perspective on BAT and the tobacco industry as a whole, stating that providing a range of low-risk products for adult consumers is not just a slogan, but a real transformation occurring within the industry.
Journalist: BAT has been transitioning from a single-category company to a multi-category enterprise for several years now. In March 2020, they announced a new corporate goal: to build a better tomorrow by reducing their impact on public health through offering more low-risk product choices. You've been working at BAT for over 20 years--can you describe how the work at BAT has changed since the beginning of the transformation process?
Over the years, I have been fortunate enough to work in most of the business departments across different regions worldwide. With a growing focus on combustibles, the transformation since our first e-cigarette launch in 2013 has been nothing short of a miracle. We have seen a plethora of products emerge, providing compelling alternatives for adult consumers to traditional tobacco. This is a remarkable development. Recognizing the enormous potential for these new products to reduce risks compared to continued smoking, our CEO has invited everyone in our organization to embark on a transformation journey in 2020, to reduce our business's impact on health. The goal of this journey is what we call a "better tomorrow.
As part of this transformation, the employees of the entire company are now participating in unprecedented ways. As we work together to reduce the impact of our business on health, our employees' energy and newfound commitment and pride are truly increasing.
Journalist: At the recent Global Nicotine Forum, you participated in a panel discussing whether the industry's transition is a myth or a reality. As someone within a company undergoing this transition, how do you perceive it?
Okereke said that there has been a real shift taking place as they are making tangible changes. Their focus is on providing a wide range of low-risk products for adult consumers. They have significantly increased their investment in low-risk products, with a whopping £496 million ($602.73 million) invested in 2021 alone.
Meanwhile, we are expanding the supply of low-risk products, which have now spread to 57 countries, including 20 countries with the highest smoking rates. We are actively working with regulatory agencies, public health departments, and governments to advocate for a regulatory and financial framework that recognizes the important role of harm reduction in tobacco control. The aim is to encourage adult smokers who would otherwise continue smoking to switch to less harmful tobacco products.
Our goal is to have 50 million adult smokers switch to low-risk products by 2030. Electronic cigarettes were only invented in 2003 by a Chinese pharmacist, so when we see the progress made by BAT in this field, I think we're doing quite well.
Journalist: How do we verify if tobacco companies are really transitioning?
Okereke explained that for British American Tobacco (BAT), "A Better Tomorrow" means that smokers who would have chosen to continue smoking can now switch to lower-risk tobacco alternatives. However, A Better Tomorrow also symbolizes BAT's new commitment to improve society for all as they transition. They are measuring and changing themselves according to the expectations of customers, employees, shareholders, government partners, and the public.
We are currently setting clear and ambitious goals, measuring ourselves and sharing progress with all stakeholders.
Our target is to have 50 million consumers using our heat-not-burn products by 2030. Currently, over 20 million adult consumers have opted for our many risk-reducing products, with 14.6% of the group’s revenue stemming from heat-not-burn products.
We also plan to achieve at least £5 billion in new category revenue by 2025. In just a few years, we have already established a £2 billion new category revenue business and are confident in doubling this number or more to achieve our revenue goal by 2025.
Journalist: During your group presentation, you mentioned that the core of change lies in the transformation of the BAT product portfolio. However, behind this lies encouragement for smokers to switch, which means BAT is doing something for society. While it has worked well in developed countries, what can tobacco companies do to replicate this success in low-income countries?
Okereke stated that the low-risk products from the British American Tobacco company have currently been sold in 57 countries and regions of the world, which is something they are proud of. They are working swiftly and responsibly to introduce these products, including in low-income countries.
It is important to remember that we are not alone on our transition journey - governments in low and middle-income countries can play a particularly important role. Evidence-based regulatory measures will help encourage smokers to transition to lower-risk products. We believe that governments in low and middle-income countries can introduce three types of regulation to accelerate smokers' shift from combustible products to lower-risk alternatives. These include regulations and policies that allow and encourage companies to innovate and bring new products to market, allowing clear communication with consumers about the relative risks of products, and incentivizing consumers to switch from combustibles to lower-risk alternatives.
Regulations should allow adult consumers to choose their preferred flavor, ensure a sufficiently high nicotine content to meet the needs of adult smokers, and recognize that products such as electronic cigarettes, oral nicotine and heated non-combustible devices pose lower risks compared to traditional tobacco products, even with taxation. At the same time, in order to achieve the benefits of reducing tobacco-related harms, these products must remain reasonably priced.
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