BAT seeing smokers cut back in downturn

British American Tobacco added that a rise in illegal trade in countries including South Africa, Turkey and Malaysia also impacted volumes, which dropped by 1 per cent to 526 billion cigarettes in the nine months to September 30. This equated to a 3 per cent drop in underlying sales.

The company, which has more than 250 brands in its portfolio, said floods in Pakistan and increases in duty on cigarettes across the world were also to blame for the decline.

Its four core brands – Pall Mall, Lucky Strike, Kent and Dunhill – saw sales volumes increase by 8 per cent, driven by a boost in consumer purchases in Japan, ahead of a significant hike in duty.

The company, which employs more than 61,000 staff worldwide, said declining volumes did not get in the way of a rise in revenues – driven by increased prices and favourable currency movements.

The decline in volumes was in line with figures reported in its half-yearly results.

Michael Prideaux, director of corporate affairs, said the drop in volumes was less about the health effects of smoking, and more about the impact of tough global economic conditions.

But Mr Prideaux said illegal trade in cigarettes – driven by hikes in duty taxes – was becoming an increasingly serious problem for BAT and the industry.