- BAT Zimbabwe’s sales volumes fell 7% to 593 million sticks as USD pricing and weak consumer spending reduced affordability and pushed smokers toward cheaper illicit brands
- Despite a 22% drop in revenue to US$21 million, the company postied US$11 million profit before tax due to lower operating expenses and removal of inflation-accounting distortions
- BAT is shifting strategy toward affordability, stronger route-to-market execution, and value-segment growth to defend market share amid rising illicit competition
Harare- British American Tobacco Zimbabwe (BAT) , a cigarette maker and distributor has recorded a 7% decline in sales volumes for the nine months to 30 September 2025 according to the latest trading update.
The decline was attributed to rising USD-denominated prices and weakened consumer spending.
‘’ This was due to stretched consumer spending and a challenging macroeconomic environment as well as a shift in in pricing strategy from ZWG to US$,’’ said the company chairperson Lovemore Manetsa .
The company sold 593 million sticks during the period, down from the previous year, as Zimbabwean smokers increasingly shifted toward cheaper and often illicit alternatives in response to reduced affordability.
The decline in volumes comes barely a year after BAT’s dramatic financial turbulence under Zimbabwe’s inflation accounting regime.
In HY2024, the company booked an extraordinary US$15.9 million monetary loss a direct consequence of hyperinflation reporting rules that distorted balance sheets across corporate Zimbabwe.
BAT’s subsequent move to United States dollar reporting, adopted to stabilise financial disclosures and align with its functional currency, has brought clarity to its earnings but introduced new pressures on consumer demand.
Cigarette revenue fell sharply by 22% to US$21 million, reflecting both the drop in volumes and the effect of recalibrated USD pricing.
The price adjustments were necessary to protect value in a volatile currency environment and cover hard-currency input costs, but they inevitably pushed products further out of reach for price-sensitive consumers.
This has accelerated a migration toward lower-cost substitutes, including illicit cigarettes now widespread across the market.
Beneath the subdued topline performance lies an unexpectedly strong profit recovery. BAT reported a profit before tax of US$11 million a rebound from a US$3 million loss in the same period last year. The turnaround is largely attributable to the elimination of inflation-driven distortions and aggressive internal cost management.
Operating expenses declined by 66% to US$10 million, aided by reduced foreign exchange losses, lower inflationary impacts, and ongoing business simplification initiatives.
To counter falling volumes and increasing competition from the parallel market, BAT enhanced its route-to-consumer initiatives, focusing on wider market coverage and stronger trader engagement. Performance-based trade programmes were expanded to defend shelf space and drive availability, particularly as the value segment gains prominence in a cost-conscious market.
Looking ahead, BAT intends to intensify its focus on recovering volumes through improved product affordability, expanded distribution, and increased activity in the value category. The company also plans to continue optimising its supply chain to reduce its cost to serve, while maintaining active engagement with policymakers to foster a regulatory environment that can effectively curb illicit trade.
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