Tobacco.org

British American Tobacco - "smoking hot" 

I can think of no industry that is more illustrative of the mature phase of the product life cycle than the tobacco industry. No matter how one twists or turns it, tobacco is dying! Equally, I can think of no better company than British American Tobacco (BAT) that epitomises astute management when in the throes of product maturity.

BAT is the world's second-biggest traded cigarette maker globally in a market which, according to the latest annual report of Altria, the holding company of Philip Morris (the world's leading global international tobacco company) amounted to almost 5,8bn cigarettes sold in 2006. BAT sells almost ten billion pounds sterling worth of cigarettes a year, covers most of the planet and earns annual pre-tax profit in excess of 3bn pounds. This is a colossal business . . .

South African investors can own this company via Richemont where the luxury business adds a sexy sideshow or via the more staid Remgro, but with the added benefit of receiving the exposure at a discount to net asset value.

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