British American Tobacco Russia

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British American TobaccoRussia

• Welcomes BAT Poland major Distributors
• MOSCOW - November 2000

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Did you know?

• BAT worldwide
• 90.000 employees
• Active presence in 180 countries
• Global market share of 15.4
• Market leader in 50 countries
• A differentiated portfolio of 320 brands
• 1999 revenue exceeded 30bio

www.bat.com
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The Russian Market

• 147mio inhabitants
• 246bio sticks/year
• Retail pricing
• Not fixed
• 0.10-1.3/pack
• No international retail chains

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The Russian Market

• BAT Russia
• 2.500 employees
• 3 factories (Moscow, St.Petersburg, Saratov)
• 16 market share - 42bio sticks
• Portfolio

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Our Mission

• BAT Russia
• Year after year we want to be the fastest growing
  tobacco company
• TMD
• We want to reach our target consumers in the most
  efficient and effective way by becoming benchmark
  supplier to the Horeca Convenience channel...

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And yes we are the fastest growing in volume
share...
We are ready to take over leadership!
Source Total Russia - MM July00
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Sales Forecast AccuracyDomestic Brands 2000
Process driven by BAT and Top5 distributors
Target /- 5
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Market share RAI 22 cities
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P1 P2 P3 22 Cities
Retail Audit geographical coverage
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And yes, we are on our way to become benchmark
supplier...

• CSM rating Best Overall
• 1998 (Moscow) BAT no.5
• 1999 (P1 cities)
• Coca Cola
• Philip Morris
• British American Tobacco

To reach our target consumers in the most
efficient and effective way by becoming
benchmark supplier to the trade within strategic
channels in Russia
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CSM Results 1999Convenience Moscow
Direct Store Delivery works!
Best Product Distribution
Best Trade Marketing
1998
Best overall BAT from no.5 to 3
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CSM Results 1999Horeca Moscow
Best Product Distribution
Best Trade Marketing
1998
Best overall BAT from no. 4 to 2
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The Supply Chain
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PMI Supply Chain
Import done by PMI
PMI
Local production
Marketing Sales (PMI)
28 RCW operated by 5 (3) dealers Delivery done
by PMI, product flow monitoring Fixed ruble price
list, 2-5 sub-warehouses owned by Key dealers
Selected regional wholesalers
Lowering retail prices through squeezing of
margins at all levels of the SC
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JTI Supply Chain
Import done by JTI
JTI
Local production
Marketing Sales (JTI)
7 own regional warehouses Fixed ruble price list,
credit lines up to 500k
20 Master dealers 1 discount
60 subdealers
Different trading terms leading to heavy price
competition irregular supply
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BAT Supply Chain
Import done by 2 distributors
BAT
Local production
Marketing Sales (ITMS)
40 RCWs operated by 5 preferred
distributors Daily price list Prepayment
(Moscow) or 72h credit (regions)
12 Selected regional wholesalers
Price model
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BAT Supply Chain
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Supply Chain Management BAT Distributor Strategy
Preferred partner
Data exchange
Regional channel access
Logistics Cash management
Pricing trading profit
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Channel AccessDistribution in the city

• Direct Store Delivery is part of our distribution
  strategy
• Plans were discussed agreed with our T5
  distributors
• Conditions
• via exclusive distributors
• to be profitable for both BAT distributors
  (financial paybacklt18 months)

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Channel AccessDistribution in the city

• Objectives DSD
• Distribution
• Increased availability of drive brands
• Reduced oos
• Stronger Price control
• Become benchmark supplier
• Strategy
• Shift from passive retail supply via wholesale
  markets to active DSD

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Direct Store DeliveryMoscow - volume (mio)
61
Volume is shifted away from WMS to DSD
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DATA Exchange
Optimised Demand planning
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What are the results of thisstrategy?
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BAT Volume Share RAI P1-2-3
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Kent RAI 22 cities
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Vogue RAI 22 cities
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Pall Mall RAI 22 cities
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Yava Gold RAI 22 cities
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Lucky Strike RAI 22 cities
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Strategy Partnership created major gains for
both BAT and distributors

• Thank you for your visitGood luck in Poland!