Carreras records highest sales in decade, as smugglers hit by supply chain disruptions

Cigarette sales during Christmas and the wider third quarter have served up the highest profit in years for distributor Carreras Limited.

The company said that it was able to claw back some market share from illicit cigarette sellers.

“The absence of illicit cigarettes led smokers to buy our brands,” said Carreras Managing Director Raoul Glynn, who noted that supply chain challenges around the world seemed to have affected smugglers.

He explained that the onset of COVID-19 led to shipping disruptions, which in turn negatively affected the supply of illicit cigarettes into the country. Carreras took advantage of that disruption and deepened its presence in rural communities in which it never had a presence.

Carreras had its best October-December quarterly sales in at least a decade and the highest profit made by the company in eight years.

“Despite all these efforts, the illicit trade continues to be the greatest threat to government revenue, and the supply continues to flood the market,” said Glynn in the company’s newly released financial report. “Undaunted, the company continues to employ other strategic initiatives to counter the effect from these activities,” he said.

Carreras in its financial results explained that the illicit brands are priced drastically below the minimum possible legal prices once all taxes are paid, and these illicit brands continue to boldly display their packs and their offers in the trade.

On the whole, though more cigarettes were sold resulting in “an increase in volumes achieved for the period,” Carreras said.

Cigarette sales climbed to $4.5 billion in the December quarter, up 12.5 per cent year on year. It beat the previous highest sales figure of $4.1 billion set in the December 2016 quarter.

Carreras made a profit of $1.15 billion up, from $1.03 billion a year earlier. The company earned less profit in every December quarter going back a decade except 2013 when a one-time payout served to double it earnings.

Over nine months, earnings per share climbed 18 per cent, from 53 cents to 63 cents; and revenue rose $10.2 billion to $11.7 billion.

Amid the breather from smugglers, Carreras in recent months rebranded the packaging of its core Craven ‘A’ cigarette to evoke “a bold and modern reimaging of the pack”. The company also rebranded Matterhorn to have a “new look of freshness”.

“They continue to perform well in the market and the leading sought-after brands, with a high level of consumer loyalty,” Carreras said.

Looking ahead, the company noted the challenges posed by rising inflation and limited spending, but said it plans to match the needs and disposable income of all consumers.

“As a Jamaican company, we are cognisant of how difficult this period has been and continue to seek all ways possible to be efficient with our spending and bring value to all our partners as we can,” stated Carreras, which recently explained that cost containment was an alternative to price hikes.

The company is based in Jamaica, but is majority owned by UK-based British American Tobacco Plc.

Glynn remains optimistic that the company can further grow revenue and sales to set new records.

steven.jackson@gleanerjm.com

A decade of December quarter profits:

2021: $1.15 billion

2020: $1.03 billion

2019: $704 million

2018: $811 million

2017: $842 million

2016: $1.1 million

2015: $889 million

2014: $763 million

2013: $2.1 billion

2012: $1.1 billion