BAT Malaysia seeks to revive sales with Vuse vape brand

BAT Malaysia, a unit of British American Tobacco, is looking to reverse declining sales by leveraging its Vuse brand in the vaping market in Malaysia. A rule change last year allowed the company to introduce the popular vaping product in the country, expanding its local addressable market. BAT Malaysia's Managing Director, Nedal Louay Salem, stated that their goal is for Vuse to become the dominant vape brand in Malaysia, comparing it to the status of Dunhill cigarettes. These efforts are expected to boost sales, improving the company's overall financial performance.

Addressing challenges in the Malaysian market

BAT Malaysia, known for its popular Dunhill cigarettes, has faced obstacles in an increasingly competitive landscape. Unregulated vapor products and black market tobacco have posed challenges to the company's profitability. Over the past decade, profits have steadily declined, resulting in a significant drop in share value. In fact, BAT Malaysia's shares have fallen by approximately 76% over the past five years. This year, the company's shares have decreased by 2.1%, bringing its market cap below $550 million.

Future outlook and projections

Industry analysts anticipate that BAT Malaysia will report sales of 2.36 billion ringgit ($496.8 million) for the year 2023 during its upcoming earnings announcement. This projection indicates a slight decline compared to sales figures from previous years, which were 2.60 billion ringgit in 2022 and 2.64 billion ringgit in 2021. However, with the introduction of Vuse and strategic efforts to capture the vaping market, BAT Malaysia aims to improve its top-line performance moving forward.

Solidifying Market Position through Vaping Expansion

BAT (British American Tobacco) is poised to strengthen its market position in Malaysia through the increased success of its vaping product, Vuse. With its introduction in August of last year, the company has been strategizing on gaining a larger foothold in the vaping market by investing in the right channels and adopting the optimal marketing mix. Although these efforts may initially impact the company's bottom line, BAT is confident that they will pay off in the long run.

The success of Vuse is crucial for BAT, especially considering the impressive market share that the company's Dunhill brand currently holds. The brand commands a significant 32% share of the tobacco market in Malaysia and dominates 62% of the premium segment. These figures, as reported in BAT's 2022 annual report, highlight the brand's stronghold in the country.

While focusing on expanding its vaping portfolio, BAT remains committed to improving its traditional products. In particular, BAT has experienced rapid growth in the consumption of its economically priced cigarettes, Luckies, which were launched last year. This positive trend is noteworthy given the context of high inflationary risks stemming from subsidy reductions and increased taxes.

Looking ahead, BAT has an exciting lineup of new products set to hit the market within the next nine months. This continuous innovation demonstrates their commitment to staying competitive and meeting evolving consumer demands.

BAT's expansion into vaping not only allows the company to tap into a sizable opportunity but also affirms its intention to remain publicly traded. Market analysts have previously speculated on the possibility of privatization due to the long-term decline in BAT's share price. However, by focusing on exploring the potential of vaping, BAT aims to redirect attention away from such speculations.

In conclusion, BAT's strategic shift towards vaping signifies a crucial step in solidifying its position in Malaysia's tobacco market. By capitalizing on the success of Vuse and continually improving its traditional products, BAT remains confident in its ability to navigate market challenges and emerge stronger than ever.