British American Tobacco (BAT) is calling for tobacco manufacturers and duty free retailers to collaborate and interact digitally with customers throughout their entire journey (before, after and during trips).

Adopting this approach is the best to way to enhance digital technology initiatives in the duty free environment, according to Nebojsa Cirjakovic, External Affairs Manager, Global Travel Retail, British American Tobacco.

Speaking as part of the TRBusiness February tobacco report Cirjakovic commented: “BAT has always been passionate about satisfying the needs of our adult consumers. This has been achieved by driving innovation and offering unique propositions to travellers around the world in the cigarette and potentially reduced risk products categories.

“In the digital space, BAT GTR has, where digital communications are allowed, brought our adult consumers online to keep them informed about our portfolio through the use of QR codes.”

Cirjakovic also recalls how BAT has managed to press ahead with organisational structure changes announced before the coronavirus (Covid-19) pandemic.

MAJOR RE-STRUCTURE

“In early January 2020 we announced a major re-structure to answer the strategic focus to drive duty free growth.

“We have integrated different travel retail business units into one truly Global Travel Retail team to manage BAT’s duty free business globally.

“As part of that process, we relocated our BAT GTR headquarters from London to Hong Kong to be closer to key strategic airports in the region and our Asian consumers.

“We continued our restructure despite the impact of the pandemic. This involved relocating several employees from London to Hong Kong, Dubai and Singapore and supporting with travel and quarantine arrangements to manage the moves. We also worked within various border and travel restrictions.”

Meanwhile, BAT has reported an overall 0.4% drop in revenue to £25.8 billion in 2020. The company, which released its preliminary results for the year ending 31 December 2020 last month, reported a +10.5% increase in operating profit to £9.96 billion.

According to the company, group cigarette volume grew in the US, Brazil, Turkey, Bangladesh and Russia, but was more than offset by declines in Global Travel Retail which was impacted by travel restrictions relating to Covid-19.

SIGNIFICANT TRAVEL RETAIL IMPACT

The company’s GTR business has been significantly impacted by the continued reduction in cross-border travel, particularly in airports.

Despite not being considered material to the group’s financial performance, the struggles associated with the GTR sector still impacted group cigarette and THP (Tobacco Heating Products) volumes by around -1%.

Cirjakovic remarked: “Travel retail is one of the sectors hardest hit by the Covid-19 pandemic. The road to recovery will be a challenging one. Covid-19 has, and will continue to, re-shape the travel retail business in the foreseeable future.

“One of the biggest challenges will be rebuilding passenger’s confidence in international travel and catering to the inevitable changes in shopper behaviour which are expected in all categories.

“Covid-19 safety measures are naturally the biggest concern for travellers as they consider whether to browse and shop. The key priority for the industry is to establish health and safety standards to address shoppers’ concerns and deliver a comfortable and satisfying retail experience.”

He concluded: “Based on available data, we expect the Asia Pacific region to be the first to return to some level of normality in terms of air travel, followed by Western Europe, North America, Middle East and Africa.”

Click here to read the tobacco section which runs from pages 20-37  in the February TRBusiness E-Zine.