Issue link: http://www.e-digitaleditions.com/i/680631
20 TOBACCO INTERNATIONAL MARCH 2016 ing markets declined more or less at the same rate. But, I don't think that we can put all the emerging markets in the same basket. There are several of them, places like Vietnam, Bangladesh, Iran and Algeria that are still grow- ing quite strongly. So, BAT did very well there. We grew share. Half of our profit in 2015 came from those markets, emerging markets, so I'm very confident that we have the right strategy in place—that we are seeing the benefits, and you'll see more benefits in the future. You've been quite active on the mergers and acquisitions (M&A) front. Are you happy with the deals that you've done? What does this mean for future potential M&A? Durante : Well, 2015 was a busy year for BAT. We closed several deals that we had been working for some time, but I think that all of the acquisitions in 2015 were great acqui- sitions, great investments. I'm going to just mention four of them. If we start with Reynolds American, we decided to keep our shareholding in Reynolds American when they went with the deal with Lorillard, so it's a $4.7B investment. As you can see from the results that Reynolds American just published, it was a very sound business for us. You go to Souza Cruz, which is a strong company. It's a fantastic company, in a country that will grow. You go back to growth, but of course, it faces a challenging economic environment in 2015. It has been tough for Brazil, but as I said with Dunhill, we are doing very well in premium seg- ment, and the portfolio is very strong. We are starting to integrate the company a little bit more with BAT with the leaf operation—the global leaf operation with the local leaf operation—so we are starting to see the benefits. We closed the Cachoeirinha plant, part of the plans that we have for the country, so the plans are going according to what we expected. We had as well the TDR acquisition. I don't need to men- tion this. I just talked about that, so fantastic acquisition, gives us a leadership position in several markets, such as Croatia, Bosnia, Serbia, either No. 1 or No. 2 position. Fantastic. The fourth one was the Chic acquisition in Poland, which is quite a good acquisition for us to roll out our pipeline inno- vation in the vapor category, with Vype. It's a company that has 65 percent market share, 800 points of sale for their brands, so it's quite a good company in Poland. And if you take the power of their brands and our brands, I think that it will be a fantastic acquisition for us. For 2016, you have to wait and see if some- thing comes to the market and, if it's financially and strategi- cally attractive, of course, we'll be interested. Have e-cigarettes already peaked, and will you continue to invest across the risk spectrum, as you've done to date? Durante : E-cigarettes is a new category, but in order to answer your question, I'd like to take a step back and talk a little bit about NGPs in general—next generation products. BAT's strategy has always been to play in the three catego- ries, not only in the vapor category. We want to play in the vapor category, tobacco heating products and medicinal license products. In the vapor category, we have launched some good prod- ucts, and we have invested heavily behind this category for the last five years. We have been able to produce and launch good products in 2015. The last one was eTank, and now we start the geographic expansion across Europe. We are very happy with the results so far. In the case of the UK, where we have been in the market for some time, we have eight percent market share. You go back six months, we had five percent, MANUFACTURER PROFILE BRITISH AMERICAN TOBACCO GLOBAL DRIVE BRANDS (GBDs) (in sticks) Volume Volume % Change Number of 2015 2014 Markets DUNHILL 59 billion 55 billion +6.0% 110+ KENT 66 billion 64 billion +3.3% 80+ LUCKY STRIKE 32 billion 31 billion +3.7% 70+ PALL MALL 92 billion 92 billion +.4% 100+ ROTHMANS 52 billion 36 billion +46.5% 60+ TOTAL +8.5% BAT's five global drive brands play a key role in the company's growth strategy and now account for 45% of all the cigarettes it sells, up from 34% in 2011. Dunhill, above, is BAT's premi- um international brand.