The tobacco roadrunnner

BAT's chief doesn't have many fans, but his company now threatens to overtake the industry's global leader. Dan Gledhill reports

Many smokers would argue that they have become a persecuted minority. The practitioners of society's latest taboo are forced to indulge their pastime in ever darker and more obscure corners, isolated from society, the victims of increasingly draconian rules restricting the pursuit of their habit. Puffers are subjected to the contempt of their more self- righteous peers, even though the threat of a premature death suggests they are more deserving of our sympathy.

Although he does not smoke, Martin Broughton must know how they feel. As chairman of British American Tobacco, he presides over the world's second largest cigarette manufacturer following last January's pounds 13bn merger with South Africa's Rothmans. After spending pounds 4.2bn on the rest of Imasco of Canada last week, BAT is within spitting distance of America's mighty Philip Morris. Broughton's six-year tenure at the BAT helm has seen the company's share price double - no mean feat in such a controversial and unfashionable industry.

So, is he lauded for his leading role in a great British success story? Anything but. Broughton's critics, among them lawyers, politicians and doctors, are far more numerous and voluble than his admirers. At least he can console himself with the thought that he chose his own destiny.

Broughton had already been with BAT for 23 years when he became chief executive in 1993. The previously diversified company had sold off its retailing businesses, and he set about divesting its sundry interests in financial services, notably Eagle Star and Allied Dunbar, to create a lean outfit dedicated entirely to the manufacture and sale of BAT's brands, which include Benson & Hedges, Lucky Strike and Dunhill.

"We used to use the cash made from tobacco to invest in other businesses," he says. "When I took over we opted to go for a growth strategy for tobacco. The total world market is hardly growing but there are some very good opportunities out there."

Broughton has succeeded in boosting BAT's share of the global cigarette market from 11.5 per cent to 16 per cent, a whisker away from Philip Morris's 17 per cent. His strategy of capturing business in the new markets of South America, Africa and the Indian sub-continent has been vindicated. If City gossips are to be believed, Philip Morris is sufficiently concerned about its competitor to be planning a swoop on Gallaher or Imperial Tobacco, Britain's two other big cigarette manufacturers.

What Broughton describes as a "differentiated strategy" has been condemned by critics as a cynical attempt to encourage the Third World to take up smoking en masse. In common with the rest of the industry, BAT's conduct is likely to be slated in an inquiry to be launched in the next Parliamentary session by the Commons' health committee.

In particular, David Hinchcliffe, the committee's chairman, is expected to attack those tobacco advertisements apparently geared towards attracting young smokers. Broughton dismisses Hinchcliffe's attitude, which the Government appears to share, as "classic nanny statism".

"It is exactly the kind of thing which appeals to this Government," says Broughton, whose non-executive directors include Kenneth Clarke, the former Conservative Chancellor. "I read the other day someone saying that it really was time to stop advertising cigarettes on television. I stopped seeing them in 1972."

That, of course, was the year that they were banned from our screens - his point being to expose the alleged ignorance of some of his critics. He is also critical of the latest move in this country to ban the use of hoardings to promote cigarettes.

"Products fall into two categories, mature and immature", he says. "Cigarettes are a mature product. The advertisements are not designed to say `start smoking'. They say `smoke ours'." His argument is that cigarette advertisements do not encourage people to start smoking. In support, he cites a 1995 verdict of Canada's Supreme Court, which overturned a ban on such adverts on the grounds that "there was no direct evidence of a scientific nature showing a causal link between advertising bans and a decrease in tobacco consumption".

The attempt to restrict tobacco adverts is not the only example of Government folly, he believes. The other target of his wrath, inevitably, is tax, that now accounts for pounds 3.20 of the pounds 3.90 for a packet of 20.

"The whole process just encourages smuggling," he says. "It offers a margin of 320p as an incentive to the smuggler. And the natural buyer of smuggled goods is the youth, because they are cheaper and it represents a more exciting purchase."

Broughton is less concerned by the various legal actions that the industry is facing in the US from dissatisfied former customers who blame tobacco companies for their ill-health.

"The underlying position of the litigation is far better than it is perceived, and it has improved a lot over the last 15 months or so," he says. "Back then, there were a number of state cases which were life-threatening for us. There is still a lot of litigation out there, but it's now manageable. We win most cases, but the cost comes from defending them."

"It unquestionably affects our share price", he complains. BAT's share price, like those of other tobacco companies, is depressed by a discount that reflects the company's ongoing legal liabilities.

This may seem a callous attitude - given the predicament of many of the smokers who allege that their health has been destroyed by BAT's products. But Broughton does not accept that these addicts were as powerless to stop smoking as they claim.

"Addiction is an emotive word whose definition has changed over time," he says. "If you take the colloquial definition, that it means anything which you do as a habit, then it clearly is addictive. But by the more objective definition, it isn't." He identifies those whose cigarette consumption is limited to just the workplace, for example, as non-addicts. If they can desist from smoking at home, he argues, then they are not addicted.

But some medical experts say that nicotine can be as addictive as heroin.

"Do they not give up because they can't, or because they don't want to?" Broughton asks. "I go home every night, take off my coat and have a gin and tonic. Am I addicted? I don't think so. Do I want to give it up? No."

He points out that there are now more ex-smokers in the UK and US than smokers. This statistic may just be part of his carefully conceived argument to assuage the animosity of his critics - one they are unlikely to accept. A damning report by the Commons' health committee this Autumn will not make his life any easier. However, Broughton remains determined to convince the sceptics of BAT's good intentions.

"As well as wanting to be the world leader in the tobacco business, I would also like to see a general perception of us as a responsible company. I would like it to be said that we are reputable people, that there is a consumer demand out there and it is better that it is provided for by us than by smugglers or bootleggers."

Not that he says so, but Broughton is probably aware that achieving world domination will be a breeze against winning over his critics.

PROMOTED VIDEO
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Extras
indybest
News
Richard Norris in GQ
mediaGQ features photo shoot with man who underwent full face transplant
Sport
Lionel Messi looks on at the end of the final
football
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Your picture is everything in the shallow world of online dating
i100
News
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
news
Life and Style
Attractive women on the Internet: not a myth
techOkCupid boasts about Facebook-style experiments on users
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

HR Business Partner (Maternity Cover 12 Months)

£30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on