Unless otherwise indicated, the reference for information in this section is reference 25.
Chiefly a tobacco company, Rothmans also maintains interests in distribution of tobacco products and manufacture and printing of packaging for tobacco and food products.
Although Rothmans has been the market innovator with almost all of the larger pack sizes (see Section 14.12 below), it is continuing to place emphasis on the more profitable premium packaging segments, where it currently dominates. The company is heavily reliant on its Winfield brand, which is barely retaining its position as market leader (see Tables 14.4 and 14.5 below). Rothmans' market share has declined in recent years, losing market domination to Philip Morris (see Table 14.3 below).
In May 1991, Rothmans acquired outright the manufacturing and distribution rights to brands owned by RJ Reynolds Inc (RJR), a major US cigarette manufacturer. Prior to this, Rothmans Holdings acted as manufacturer and importer of selected RJR brands, under a joint venture agreement. The acquisition includes markets in New Zealand, Fiji and Papua New Guinea. RJR has held around 1% of the Australian market, and around 3% of the New Zealand market.(38) Acquisition of the RJR brands significantly augments Rothmans' brands portfolio, and gives the company more exposure in the lower end of the cigarette market.(38) Rothmans will pay for these rights over the next 20 years on the basis of performance and royalties.(38) Rothmans is also the Australian agent for a number of other imported brands (see brand list below).
Following the sale of its interest in Allens Sweets in 1989, Rothmans held significant cash reserves and was said to be seeking investment targets in the tobacco business and other fields 'capable of generating synergy' with Rothmans' current interests,(17) possibly within the food industry, or in expansion of its printing and packaging capabilities.(12) However the 1992 Annual Report made no mention of acquisitions of this nature, outlining the company mission as 'a policy of growth in tobacco and to being the leading tobacco company in the markets in which we operate'.(39) During 1994, shareholders were offered a capital return totalling almost $70 million, still leaving Rothmans with a net cash balance in excess of $100 million.
Rothmans' has manufacturing plants located in Granville, New South Wales, and Bundamba, Queensland.
The early 1990s were a difficult period for Rothmans, with net profits for the 1991-1992 financial year plunging to 1985 levels. The company attributed its poor results to a constellation of factors: intense inter-company competition, low margins, the market swing to larger packs of cigarettes, the economic recession, and continued legislative pressure on advertising.(39) During this period, Rothmans lost overall market leadership to Philip Morris (Table 14.3). Downward pressures were subsequently eased by reduced levels of price discounting in the market place, and company restructuring and rationalisation.(40)
In its 1994 Annual Report, Rothmans reported an overall net profit of $61.1 million, on a turnover of $1.557 billion. Although these figures were a significant improvement on previous years' figures, due to improved performances in some overseas operations, profitability of Australian operations was reduced, mainly due to increased marketing costs, presumably associated with the launch of Freedom 40s, Dunhill 25s and a new roll-your-own brand, Samson.
According to the 1994 report, the company outlook has improved because of good performances in some overseas operations, and because the operating losses experienced over a number of years in the Philippines will cease with the company's total withdrawal from manufacturing in that country. However an air of gloom remains over Australian operations, where the increasingly constrained commercial environment brought about by State and Federal legislative measures, and higher State licence fees and Federal excise, was a contributing factor to poorer Australian results. Improved manufacturing and operating efficiencies remain a company priority.
Rothmans' parent company is Rothmans International Investments Ltd, based in the United Kingdom. Rothmans International has a 50% shareholding. Other major shareholders include insurance and superannuation companies.
Rothmans' major shareholders, at 23 May 1994 were:
Rothmans Holdings (Australia) BV
National Nominees Ltd
Permanent Trustee Company Ltd
Chase Manhattan Nominees Ltd
ANZ Nominees Ltd
Westpac Custodian Nominees Ltd
State Authorities Superannuation Board
Norwich Union Life Australia Ltd
Tyndall Life Insurance Company Ltd
Queensland Investment Corporation
Perpetual Trustee Company Ltd
Barclays Australia Custodian Services Ltd
Mercantile Mutual Life Insurance Co Ltd
Manly Hotels Pty Ltd
RACV Investment Co Pty Ltd
Colonial Mutual Life Assurance Society Ltd
MLC Life Ltd
Alphoeb Pty Ltd
Legal & General Life of Australia Ltd
The Commonwealth Superannuation Board of Trustees
Due to the decline of the Australian and New Zealand tobacco markets, Rothmans has stated that it is looking to the growth markets of Asia, from where it also intends to expand through regional exports.(17) Rothmans has manufacturing operations in New Zealand, Papua New Guinea, Indonesia, Fiji, Western Samoa, and until recently, the Philippines. These overseas operations are generally profitable for the company, apart from in the Philippines and Indonesia. In its 1994 Annual Report Rothmans announced that it had totally withdrawn from manufacturing operations in the Philippines, following continuing heavy losses in a difficult marketing environment. In Indonesia, where western style cigarettes must compete against the local kretek or clove cigarettes, Rothmans is withstanding poor results in the short to medium term, in anticipation of eventual long term profitability (see Chapter 3, Section 21 and Chapter 5, Section 3 for further discussion about kreteks).
Rothmans runs joint venture operations with the governments of Papua New Guinea, Fiji and Western Samoa,(40) where it also apparently provides significant financial sponsorships. According to its 1992 Annual Report,(39) 'Rothmans is a major supporter of educational and sporting programs and plays a leading role in supporting the development of Fiji's cultural heritage.'
Rothmans has established investment and insurance companies in Singapore, apparently to assist in acquiring and managing offshore interests.(12) The company is preparing to increase marketing efforts in its overseas markets, and is said to have committed $82 million for this purpose for the next five years, almost doubling its budget from the past five years.(41)
Alhambra Industries Inc (Philippines)
American Cigarette Company (Overseas) Ltd (NZ)
American Cigarette Company (Overseas) Pty Ltd
Amstel Tabakmaatschappij (New Zealand) Ltd
Anzpac Services (Australia) Pty Ltd
Anzpac Services (NZ) Ltd
Cameo Industries Ltd (NZ)
Central Manufacturing Company Ltd (Fiji)
Consumer Brands Holdings Inc (Philippines)
Granville Tobacco Processors Pty Ltd
International Brands Ltd (New Zealand)
International Cellars Pty Ltd
John Brandon & Sons Ltd (NZ)
Justin & Rose Ltd (NZ)
Luxury Products Distributors Pty Ltd
Martins of Piccadilly Ltd (NZ)
Martins of Piccadilly Pty Ltd
Murray Sons & Company (New Zealand) Ltd
National Tobacco Company Ltd (NZ)
Nelson Distribution Pty Ltd
Nelson Tobacco Co Pty Ltd
New Zealand Inkmakers Ltd
PT Rothmans of Pall Mall Indonesia
Pacific Tobacco Company Ltd (NZ)
Pall Mall Investments Pty Ltd
Pall Mall Ltd (NZ)
Perilly's Tobacco Manufacturers Ltd (NZ)
Peter Stuyvesant Ltd (NZ)
Philinvest AG (Switzerland)
Rembrandt Tobacco Corporation (Overseas) Ltd (NZ)
RHL Insurance Pte Ltd (Singapore)
RHL Investments Pte Ltd (Singapore)
Rothmans Asia Pacific Limited
Rothmans Asia Pacific Services Limited
Rothmans Distribution Services Limited
Rothmans Exports Pty Ltd
Rothmans Holdings Ltd
Rothmans Holdings (New Zealand) Ltd
Rothmans Machinery Suppliers Ltd
Rothmans New Zealand Ltd
Rothmans (New Zealand) Ltd
Rothmans of Pall Mall (Australia) Ltd
Rothmans of Pall Mall (Fiji) Ltd
Rothmans of Pall Mall (New Zealand) Ltd
Rothmans of Pall Mall (PNG) Pty Ltd
Rothmans Pension Nominees Ltd (New Zealand)
Rothmans Tobacco Company Ltd (W Samoa)
Schimmelpenninck Sigarenfabrieken Ltd (NZ)
St Regis Tobacco Corporation (New Zealand) Ltd
Tasman Suppliers Ltd (New Zealand)
The Nelson Tobacco Manufacturing Corporation Pty Ltd
Winfield Cigarette Company Ltd (New Zealand)
Rothmans undertakes the following major activities:
Manufacturing, processing, marketing and importing of cigarettes, cigars and tobacco products.
Cigarettes (locally manufactured): Brandon, Cambridge, Cartier, Dunhill, Freedom, Holiday, Now, Peter Stuyvesant, Rothmans, Ransom, St Moritz, Special Mild and Winfield. Rothmans also makes a local version of Salem (an imported brand from the US). Imported brands: Camel, More, Salem, Winston (RJ Reynolds US), Gauloises and Gitanes (Seita, France), and Vogue (Martin Brinkman, West Germany).
Roll-your-own and pipe tobaccos (locally manufactured): Flagship. Imported brands: Rotterdam Shag, Samson, Blend 11, Dunhill, Troost.
Cigars (imported): Corps Diplomatique, Schimmelpenninck
Rothmans Holdings Limited is involved in the warehousing, sale and distribution of its tobacco products.
Through its wholly owned subsidiaries Anzpac Services (Australia) Pty Ltd and Anzpac Services (NZ) Pty Ltd, Rothmans Holdings is involved in printing, packaging and paper converting. Anzpac (Australia) is the sole Australian supplier of ultra high-gloss packaging used by local food manufacturers for export and local markets. Anzpac also engages in the manufacture of tobacco packaging.