The Business Year

Mark Filimontsev

General Manager Kazakhstan & South Central Asia, BAT

Gian Luigi Cervesato

General Manager & Vice-President, Japan Tobacco International Kazakhstan

How does Kazakhstan compare to the other countries you’ve worked in? MARK FILIMONTSEV Kazakhstan has certain similarities with Russia, Ukraine, and Eastern Europe. At the same time, there are differences […]

How does Kazakhstan compare to the other countries you’ve worked in?

MARK FILIMONTSEV Kazakhstan has certain similarities with Russia, Ukraine, and Eastern Europe. At the same time, there are differences between Russia and Kazakhstan, which I like a lot. There is a rich cultural heritage in Kazakhstan, and it clearly has Asian influences to it, which you do not see so pronounced in Russia, and I enjoy that very much. I am General Manager for Kazakhstan and South Central Asia, which includes three states: Tajikistan, Kyrgyzstan, and Turkmenistan. I am responsible for four markets, and Kazakhstan is a larger market, selling about 30 billion sticks in terms of volume per year. In 2005, the company expanded its distribution operations in the country, and developed a clear investment plan. Since then, market share has increased to 10%. Our flagship brand is Kent, as we are focusing on our global portfolio. We are number three in the market.

GIAN LUIGI CERVESATO In terms of business, Kazakhstan is on the right path, and I believe that the country has a very promising future. In fact, Kazakhstan has become the reference country for Central Asia. The economy remains very commodity dependent, but there are efforts to diversify and establish an industrial network across the nation and attract investors. On a historical scale, 20 years is a very short time; considering the case of Kazakhstan, we see that not many countries have achieved the country’s level of development in such a short period of time. In terms of macroeconomics, the management of the country has been fairly wise. We saw how easily the government steered the country out of the global crisis, building reserves during the good times that could be used in more dire situations. Having said that, Kazakhstan is a country on its way to something better. Success in attracting foreign investors is related to regulation, administration, and ease of doing business. The key is to sustain an open dialogue with industry experts while drafting these regulations.

How would you describe your growth strategy, provided the peculiarities of the tobacco industry?

MF Our strategy is about growing our global brands, building distribution capabilities, and developing talent. In that way, we have been successful, but still have a long way to go in terms of implementing the strategy. However, our results so far demonstrate that the strategy is working, so we will stick to it. BAT has been active in this market since 1997. Today, it has 14 depots across the country, with more than 500 employees. It imports its products into the country, and its market share is about 10%, so we bring into the country about one-tenth of the total market. Our focus is on the Kent, Dunhill, Vogue, Pall Mall, and Viceroy brands, which are all international. We run our direct store sales operations in Kazakhstan, and this distribution model has delivered results so far.

GC We do not focus on sector growth; this is a set and stable market that is declining worldwide. Instead, our strategy is to take market share from our competitors, and we define our success by that rubric, along with profit growth and expanding into other geographies. Across these three points we have been very successful. Considering our position in Kazakhstan, over the last decade our investment range has been significant—$120 million—and the company has experienced accelerated growth over the last five years. We have sustained these investments for two reasons. Firstly, we believe in this country. Secondly, with a market share of 41%-42%, it has become a very significant market for us, and among the most important for JTI worldwide. The next step is to make Kazakhstan a regional hub by preparing our facilities and management for geographical expansion. Today, we have a 50% market share in Kyrgyzstan and 30% in Mongolia. We started a new operation in Tajikistan, and we are about to enter Turkmenistan. JTI entered Uzbekistan at the end of 2010 and our operations so far have been very successful. Our market share is 5% and growing very fast. Our production is based in Kazakhstan and the key expansion of our facilities is targeted at these geographies.



You may also be interested in...

Khuram Muradov

KAZAKHSTAN - Real Estate & Construction

Go East


President, Prime Group Holding Company

KAZAKHSTAN - Real Estate & Construction

Property Management



Rinat Kassymov

KAZAKHSTAN - Real Estate & Construction

A Constant Garden of Returns


CEO, Mercury Properties

View All interviews