Accepting Complexity
BAT is continuing its emphasis on innovation within travel retail and greater coverage of the super-premium segment, as David Davies reports
FRESH, colourful and energetic – British American Tobacco’s Dunhill My Mixture Tribute brought a new dimension to travel-retail tobacco upon its launch in 2007. Developed to mark the centenary of the Dunhill brand, the product also heralded a significant uplift for overall brand sales, particularly in the Asia Pacific region.
Industry acclaim for the inventive super-premium launch wasn’t slow in arriving, as illustrated by its success in the Star Product of the Year category at the 2007 Frontier Awards. It is not overstating the response to say that our judges were bowled over. “I’m very pleased to see that in this category there is a supplier who is being so innovative,” wrote one, while another observed: “It is a real story for the tobacco industry and an example of research which was proven correct in its approach to a segment of our business which has seen many threats and huge advertising restrictions.”
It is no great surprise, then, to discover that My Mixture remains a top priority for BAT in 2008. With Tribute
now off-shelf, BAT is rolling out another exclusive My Mixture product, Dunhill Spotlight, that again pairs a range of special blends with colourful packaging.
Speaking to Frontier in late July, BAT’s managing director GTR (global travel retail), Neil Lovett, confirms
that the new My Mixture product continues a long-term strategy to elevate the Dunhill brand from its existing premium profile. “Super-premium is precisely where we want to go with this,” he says. “It’s about giving consumers in duty-free/travel-retail a high quality product that they can’t get anywhere else
in the world, and that will be reflected in the superpremium pricing – in much the same way as it has been in the liquor category.”
Of course, BAT would not be moving in this direction if its market overview wasn’t underlined by compelling sales data. Accordingly, Lovett confirms that sales for Tribute surpassed expectations by a
substantial margin, and that Spotlight gives every indication of following suit.
"Our target for Tribute was for it to be 5% of the Dunhill family, and we ended up with about 6.5%, so that was extremely encouraging,” he says. “We also have a target of 5% for Spotlight and that is already
being exceeded in the Far East.”
Long-term BAT observers will be aware, however, that the premium/super-premium strategy is not restricted to the Dunhill brand. Of late, the company has been devoting considerable energy to Vogue Éphémère, a brand with a heritage that predates the acquisition of Rothmans International in 1999. Developed with female smokers in mind, Vogue Éphémère is now the subject of a concerted promotional push intended to expand its customer base beyond its current European stronghold.
“It is a brand that we think has huge potential in the premium segment,” says Lovett. “There’s a very stylish, French feel to the brand, and it’s been available in Europe for some time. Now we plan to take it to otherparts of the world. We think it could be quite a departure for tobacco.”
‘ONE HELL OF A BRAND’
Factor in the continued propagation of Kent line extension Kent Nanotek (see Box) and the Lucky
Strike brand, and it is clear that BAT GTR has – as Lovett puts it – “plenty on its plate”. However, there is now a further dimension to the division’s workload with the addition of Scandinavian Tobacco’s cigarette brands through an acquisition deal completed in July. While the organisational implications of the buy-out have yet to be fully analysed, Lovett makes it clear that he is looking forward to working with the ST family.
“We are inheriting one hell of a brand with Prince,” he enthuses. “ST’s strategy has been very simple and
very clear in that they have a strong consumer base, and their investment within duty-free has been to protect the Scandinavian consumer in terms of where he travels to. They have focused on ensuring availability, and that is something we will continue to do postacquisition. It’s a big business for us in Europe, particularly in the north, and it’s something we can use as a base for our Global Drive brands like Dunhill, Lucky Strike and Kent.”
Change for the sake of change is firmly off the agenda. “In the short to medium term, it will simply
be a case of bolting-on,” says Lovett. “ST have managed to simplify a very successful business model,
and we certainly wouldn’t want to upset that.”
With an enhanced portfolio at its disposal, and a raft of successful promotions and campaigns to its
credit, BAT is free to pursue a travel-retail strategy that, like a great many of the channel’s most successful, has now coalesced around one simple but elegant idea: exclusivity.
"We are clearly demonstrating our long-term commitment to the channel, retailers and consumers with such a portfolio. However, with such a strategy comes complexity, be it logistics, brand management,
manufacturing or trade marketing; this we fully accept,” concludes Lovett. “By their very nature, exclusives don’t provide huge volume, but the value they provide in terms of giving interest to consumers and retailers is huge. It also demonstrates the commitment of BAT to the GTR channel. […] Exclusivity is what consumers and retailers say they want, and we are providing it. It has to be the way forward!”
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