The Camel-in-a-kiosk confrontation

Tobacco giant British American Tobacco SA (Batsa) has denied its installation of a display kiosk in a Western Cape Spar shop caused sales of cigarette rival Camel to drop.

The inquiry into allegations that Batsa abused its 90% market share to give its brands prominence over rival Japan Tobacco International (JTI) products continued at the Competition Tribunal yesterday.

The tribunal can impose a penalty of up to 10% of Batsa's annual turnover if it finds against it. Batsa's parent company's 2006 annual report states that the Africa and Middle East region accounted for £1,5bn in revenue, out of a group total of £9,8bn.

Alan Denby, who managed, and later owned a stake in, Hermanus Kwikspar between 2000 and 2006, presented evidence. He said sales of Camel, one of the shop's top brands, fell after Batsa introduced a new cigarette kiosk in the store. He said the outlet initially owned the cigarette display unit and filled it according to popularity, placing the most popular cigarettes at eye level.

However, Spar and Batsa came to an agreement in 2002 on quarterly rebates, from which Spar owners could benefit if they merchandised the display according to Batsa instructions.

As a result, Camel was moved from its prominent position and put near the bottom, and it started losing popularity, Denby said.

After a new display unit was installed in 2004, sales of Camel dropped out of the top 10 brands.

Denby said he could not rectify the position as this would result in the outlet losing its rebate of about R8000 a year.

Batsa counsel Duncan Turner said Batsa's new display unit, which Denby said hid the product, had not resulted in falling sales. Consumers were brand loyal, which was why Spar kept such a range of choices. Rebates did not always factor into the outlet's decision-making process.

Turner presented evidence from Spar's distribution centre, through which all cigarettes were ordered, indicating Camel sales improved after the new display unit was installed.

JTI counsel David Unterhalter contested the figures. Denby said the order figures did not correlate with the outlet's sales.

Article via I-Net-Bridge