BAT to cut 950 jobs at German cigarette factory to reduce costs

Posted on 15 July 2016

Source: The Edge

British American Tobacco Plc (BAT), the maker of Lucky Strike cigarettes, is eliminating 950 jobs at a German factory as it moves to cut costs amid a decline in smoking in western Europe.

The staff reductions at the 1,320-worker factory in the Bavarian town of Bayreuth will be implemented over two years, the London-based tobacco company said in a statement Thursday. Cigarette production will be shifted to BAT’s other European plants, though the factory will continue to make fine-cut tobacco, it said.

“A challenging economic environment coupled with over-regulation and excessive excise increases in some countries has led to a decline in legitimate volumes,” BAT Germany said in the statement.

BAT has whittled its total employee count down to about 87,000 at the end of 2015 from about 140,000 in 2001 as higher tobacco taxes and public smoking bans dent cigarette consumption. In the last ten years, the smoking rate in western Europe has declined by 3.6 percentage points to 23%, according to data tracker Euromonitor. In March, BAT announced it was closing a factory in Malaysia due to the rising costs of cigarette production.

BAT, the world’s third-biggest listed tobacco company, has a 19% share of the German tobacco market. Roll-your-own cigarettes have become popular in Germany as consumers have sought lower-tax alternatives. 

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