STRONG FOOTHOLD

Malaysia 2019 | TOURISM | INTERVIEW

New taxes and laws have presented challenges for BAT, but the company is working to overcome these difficulties.

Erik Stoel
BIOGRAPHY
Erik Stoel was officially appointed Director of BAT (Malaysia) Berhad and as Managing Director of the group in 2016. He first joined the BAT Group in 1995 as Brand Manager in Ukraine. One of his assignments was to serve as Marketing Director of BAT Malaysia in 2010-2012 before moving to Korea as BAT Korea’s Marketing Director. Subsequently, he was promoted to his prior role of Area Director North Asia Area, responsible for Korea, Taiwan, Hong Kong and Macau. Stoel holds a degree in marketing from Hanzehogeschool Groningen, Netherlands, and master's in business administration from University of Northumbria in Newcastle.

What have been the main recent accomplishments and developments for BAT Malaysia?

BAT has a long and successful foothold in Malaysia that dates back to 1912. In 1999, BAT Malaysia was formed from the merger of Rothmans of Pall Mall (Malaysia) Berhad and Malaysian Tobacco Company Berhad, to create the country's largest tobacco company with a portfolio of reputable brands such as Dunhill, Rothmans, Peter Stuyvesant, Kent and Benson & Hedges. Since then, we have always been market leaders and are listed on the stock exchange as a PLC, which means a lot of publicity always surrounds the company. We are proudly listed on Bursa Malaysia, and are highly regarded for our governance and integrity, which we protect with care. The industry came under pressure at the end of 2015 when the Malaysian government suddenly decided to increase excise by 40%. This deeply affected the market and gave a dramatic boost to the illegal cigarette trade. At the time, consumers had already been struggling with affordability, and in 2015 prices reached a level where many could not afford legal cigarettes anymore and moved from legal brands to the illegal market. Ironically, the total consumption in Malaysia has actually grown over recent years because of widely available illegal cigarettes, which are cheap because the price does not include excise. Malaysia's long borders and coastlines allow traders to ship illegal cigarettes into the country quite easily, and after the 2015 excise hike Malaysia's illegal cigarette market rose from 30-35% to 63% in just a couple of months. The effect of the excise hike was compounded by the fact that enforcement is insufficient.

How are you addressing new tobacco-related trends?

Globally, we are witnessing trends such as e-cigarettes, heated-tobacco-products, snus, and chewing tobacco. These products are categorized as potentially risk reduced products (PRRPs) and supports our harm reduction agenda. We are obviously also looking at these trends in Malaysia, because the BAT Group globally has a strategy of transforming tobacco and working consciously on the harm reduction agenda. The legislation in Malaysia is still a little bit challenging. We would be interested in commercializing vaping in Malaysia, but it falls under the Poisons Act and is totally illegal apart from medicinal use. We are trying to work with the government to see if there is an opportunity to open this up and what kind of legislation needs to be in place. We have a keen interest, but it would require an enormous investment to build up the brands and the R&D behind it, so first any legislation that would allow it needs to be stable.

What is your outlook for 2019?

We have an exciting portfolio plan for 2019 and are looking into opening a few new segments in the market. These are mostly circled around our key brand, Dunhill, but we also have exciting plans for Rothmans. BAT is about brands and about people, and we have invested heavily in the development capability of the latter. The tobacco industry might not always be considered the most attractive industry to work in, but we pride ourselves in our training and development programs to bring people to the highest level and provide them fantastic careers.