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Eyeing huge domestic and Middle East markets

British American Tobacco (BAT) opened a cigarette plant in Tire on 9 October 2002, bringing the number of foreign cigarette
manufacturers with production units in Turkey to three.

A large crowd of visitors, including State Minister Yilmaz Karakoyunlu, members of parliament, business leaders, bankers and state and private tobacco industry officials, attended the opening ceremony.

BAT entered the giant Turkish market with its blended Gold 1, Silver 4 and Blue 8 Kent brands and light-flavoured, long-flavoured and full-flavoured Viceroy cigarettes, and began distribution immediately from production lines at the factory to Istanbul, Ankara and Izmir, Turkey?s three largest cities, company officials said.

??BAT will have a base production of two billion sticks of cigarettes a year,
but we plan to produce and sell many more cigarettes than that figure in the Turkish market,?? BAT chairman Martin Broughton told a news conference in the Aegean port of Izmir on the occasion of the opening of the plant. He said the Anglo-American cigarette manufacturer planned to invest US$ 200 million in the factory over the next five to ten years.

BAT plans to double the number of its employees at the plant to 600 in time, Paul Helderman, general manager of BAT Turkey, said. BAT?s cigarette packets will contain figures on the amount of nicotine and tar per cigarette and a written warning that smoking is forbidden for youths under the age of 18.

??Our cigarettes are aimed at sophisticated smokers in the city,?? Mr Helderman declared.

BAT owns 87.5 per cent of the plant, while 7.5 per cent is owned by Sunel Ticaret T??rk A.S., a Turkish firm that has been the tobacco purchasing agent of BAT for decades. The remaining 5 per cent stake is held by D??zey Pazarlama A.S., a marketing company owned by Ko? Holding, Turkey?s biggest industrial and trade conglomerate with the largest distribution network in the country.

D??zey Pazarlama, which will be the sole distributor of BAT cigarettes in Turkey, will introduce BAT?s cigarettes to 150,000 points of sale, Demir Ayta?, general manager of D??zey Pazarlama, told reporters at the same news conference.

Targeting the Middle East

Industry observers said the factory, which would be one of BAT?s primary production units, could turn out as many as 60 billion sticks of cigarettes a year in Turkey.

??BAT aims to make the Tire plant a base to export its products to the Middle East, where it has a large market for full Virginia cigarettes. It plans to produce cut fillers in Turkey for the Middle East countries,?? a senior executive with a rival cigarette company said.

He said the BAT plant was bigger than many of the country?s Turkish and foreign cigarette factories.

But he questioned D??zey Pazarlama?s ability to distribute cigarettes to 120,000 grocery stores in Turkey that sell directly to smokers.

??Cigarette distribution is a big headache. You have to visit each grocery store three times a week to get orders. Some days you will get orders for only one or two packs. D??zey doesn?t specialise in this type of marketing and distribution,?? the executive said.

BAT is also expanding its operations in South Korea, Vietnam and Nigeria with new investments, company officials said.
Other cigarette producers in Turkey include Tekel, the state tobacco, spirits and salt concern with seven cigarette plants, which has a 70 per cent market share for cigarettes and other tobacco products. Philip Morris and Japan Tobacco International have been producing cigarettes in Turkey since the early 1990s. Together the two companies control about 30 per cent of the 120 billion sticks a year cigarette market.

JTI exports its cigarettes, while Tekel sells mainly leaf tobacco abroad. Philip Morris sells its products solely on the Turkish market.

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