British and American Tobacco
Join now to read essay British and American Tobacco
On the 29th September 1902 the UK’s Imperial Tobacco Company merged with the American Tobacco Company. Ending a trade war each company agreed not to operate in the other firm’s home country. Businesses outside the UK and US were then transferred to the British and American Tobacco Company, giving them operations in Germany, Japan, Canada, Australia, China and South Africa.
Over the next ten years the company expands into India, Egypt, Holland, Belgium, Sweden, Norway, Finland, East Africa and Malaysia. By 1910 the group was selling over ten billion cigarettes worldwide.
B.A.T becomes British
A major event in the company’s history was in 1911 when British and American Tobacco become British owned by divesting its shares in the joint venture. B.A.T became listed on the London stock exchange leading to British investors buying most of its American partners shares.
The company then continued expanding acquiring Argentine firm Bozetti and Co. in 1913. Then in 1914 a tobacco manufacturer in Brazil, Souza Cruz was bought.
World War One
The First World War in 1914 had a very positive impact on company sales, increasing B.A.T’s sales to twenty five billion due to the increased demand from soldiers.
In the Years following 1921 when Cigarrera Bigot Sucs was acquired in Venezuela acquisitions were also made in Chile, Mexico and Central America.
Expansion into US
In 1927 B.A.T made an important move into the American tobacco market through the acquisition of Brown & Williamson, a small North Carolina company. By this time it was already becoming one of the worlds leading tobacco manufacturers, controlling one hundred and twenty subsidiaries and employing over seventy five thousand workers, running profits of around six million pounds per annum.
Hold on supply chains
In 1932 company depots developed international distribution networks which became subsidiaries of the company. In the same year B.A.T were able to gain control of supply chains through manufacturing operations and leaf-growing in India, Brazil, China and Nigeria.
World War Two
The war had a bad impact on the group. Sales of cigarettes in China had exceeded fifty five billion, however the Japanese invasion brought these to a halt for four years starting in 1937. By 1942 profits had fallen to three million pounds per annum, staying at that level until the end of the war.
After the war inflation made trading conditions difficult, hampered more so by the high price of leaf and the need to replace assets such as factories lost during the war.
Between 1953-55, measured by company profits, British and American Tobacco was the third largest company in Britain, Germany and France. Then in 1956 as an act to expand its predominance in the international brand market B.A.T obtained the Benson and Hedges business.
The early 1960’s saw the group diversify into other industries and markets; paper and pulp, cosmetics and food.