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September 30th, 2012:

The running man of Big Tobacco

September 30, 2012 2:55 pm

The running man of Big Tobacco

By Christopher Thompson

©Rosie Hallam

Consumer choice: Nicandro Durante says he never has ethical concerns about selling tobacco

It is hard to keep up with Nicandro Durante. The first non-Briton to run British American Tobacco, he speaks English with the thick, distinctive nasal tone of his native São Paulo, which can make it difficult for non-Portuguese speakers to understand him.

Such contradictions, however, are also emblematic of Mr Durante. Paulistas have a reputation for brash, larger-than-life personas, embodying the national characteristic known as jeito brasileiro, which is roughly analogous to street smarts or cunning in business.


Mr Durante could not seem more different. The chief executive of the world’s second-largest tobacco company by sales is dressed in a technocratic garb of dark suit, white shirt and blue tie. His panoramic office at Globe House, BAT’s eight-storey headquarters on London’s Embankment, is similarly more functional than personal.

In spite of his accent and his low-key nature – one possible reason why he has done so few interviews with the English-language media, even though the company he runs is listed on the FTSE 100 and is based in London – Mr Durante has long been used to making his presence felt.

When he was 17 he set the tempo for the youth team at Corinthians, one of Brazil’s biggest football clubs, as a central midfielder. “I did all the running,” he says.

The routine persists but his focus now is marathon running, waking up at 5.30am every day to train.

Despite his fitness kick, Mr Durante is also a smoker. Up to four times a week he lights up a cigar, usually with a glass of red wine. “I know the risks associated with cigars but the pleasure it gives me and that moment – it outstrips the risks,” he says.

Is he addicted?

“If I want to stop smoking cigars I stop,” he says. “I don’t smoke full-time – I smoke three to four cigars a week but I can go one or two weeks without smoking . . . I smoked cigarettes and decided to stop when I started cigar.”

That may be the case but not everyone displays such fortitude when it comes to addiction. The company is part of an industry that is responsible for one in 10 of the planet’s adult deaths, according to the World Health Organisation.

The CV

Born: 1956, in São Paulo
Career: Joins British American Tobacco’s Brazilian subsidiary Souza Cruz in 1981.
1995: seconded to the UK head office.
● 1997: moves to Hong Kong
● 2000: returns to Brazil as finance director for Souza Cruz.
● 2006: In March, becomes the regional director for Africa & Middle East.
● January 2008: appointed BAT’s chief operating officer.
March 2011, March 1: takes up role of chief executive
Family: Married with two children.
Interests: Enjoys running, tennis, opera and Italian food.

Despite this, he defends the sector in a measured, sanguine voice. “I think we are a very ethical industry and a very responsible industry,” he says. “It’s a risk product and I think regulation is good . . . we were pioneering campaigns about the dangers of tobacco [so] I don’t have any problem with that.”

Does he ever have any ethical misgivings about selling tobacco?

“Never.” Smoking, he says later, is the “consumers’ choice”.

Such choice, however, could soon be severely circumscribed. In December Australia will implement the world’s toughest antismoking laws, whereby cigarette packets will be stripped of their branding.

Plain packs, as the proposals are called, will in reality be anything but. While cigarette brand names will be allowed only in small, standardised fonts, most of the package will be taken up by gruesome images of tobacco-related diseases: blackened lungs, rotting teeth and gangrenous feet.

Big Tobacco has not taken the move lightly. The four biggest companies – Philip Morris, BAT, Japan Tobacco and Imperial Tobacco – are pursuing legal action against the Australian government, claiming that this is a case of theft of their intellectual property.

“We have to dispel some of the myths against the industry,” says Mr Durante. “We are not against regulation, we are against bad regulation, and plain packaging is not going to meet public health goals.”

Nonetheless, both the industry and his company are in rude health. Last year BAT made £4.9bn in pre-tax profits, a £600m increase on the year before, on turnover not far short of £50bn.

In times of recession, tobacco equities are seen as the classic defensive stock. The investment logic is that although the world’s smokers might trade to cheaper brands, they are unlikely to stub their cigarettes out altogether. Accordingly, BAT shares, in common with those of its competitors, can virtually guarantee a certain amount of earnings per quarter.

“They are the closest thing to a government bond in the equity market,” says Martin Deboo, an analyst at Investec.

Another spur is the fast growth in the numbers of smokers in emerging markets led by Indonesia, Brazil, Russia, Turkey and Nigeria, where nearly 80 per cent of the world’s 1bn smokers reside and where BAT, which has operations in 180 countries, earns more than two-thirds of its revenues.

Unsurprisingly, the appointment of a Brazilian as chief executive 18 months ago was regarded by many as a natural fit. And he says that for him personally, the appointment was the “icing on the cake”.

Mr Durante’s parents, from the Lazio region near Rome, moved to São Paulo during the 1950s during a peak in European migration to South America. His father worked with the shipping industry before taking up a job with the Italian tyre company Pirelli.

After joining the industry 30 years ago, following stints in finance for two local companies, Mr Durante moved to Rio de Janeiro and joined Souza Cruz, the Brazilian tobacco company that later became BAT’s largest subsidiary.

He was subsequently moved to offices in Asia, Africa and the Middle East, where he gained a reputation for aggressively expanding the market share of BAT’s cigarette brands such as Dunhill and Lucky Strike.

“We have a very good footprint in those kinds of developing-world markets,” says Mr Durante. “The business is growing faster on volumes and also on profitability because the margins get better over time reflecting [more] purchasing power, disposable income and population growth.”

Amid such battles Mr Durante has also begun forging his legacy in a more counter-intuitive business: cigarette substitutes.

Last year, in part to manage declining smoking rates in the west, Mr Durante set up Nicoventures, a business division that has invested £100m in finding healthier ways of satisfying smokers’ cravings. It plans eventually to launch a nicotine inhaler.

“The future is about winning consumer moments,” he says. “There will be consumers who go for a cigarette, [or] a non-combustible product and consumers who go for a nicotine-based product – so this is something we have paid a lot of attention to.”

In the nearer term, however, he is focused on expanding the company’s tobacco portfolio – and combating what the company sees as overzealous regulation.

“I don’t think non-smokers should be exposed to smoke but I think we can find a solution to allow both kinds of people to enjoy what they want [such as having] separate areas,” he adds. “Smokers should have the same rights that non-smokers have.”

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