OCTOBER 11, 1999

More consolidation in the tobacco industry

THE European Union tobacco ban may mean little to most F1 teams by the time it arrives in 2006 - as the tobacco industry is currently contracting at such a rate that the number of sponsors available is reducing fast. Williams has already lost its support from Winfield as a result of the merger of Rothmans International and British American Tobacco and there has been talk in recent weeks that Gallaher - the company which owns Jordan's title sponsor Benson & Hedges - may soon be bought up by giant rival Philip Morris (the owner of Marlboro).

Last week saw France's SEITA merging with Spain's Tabacalera, to form a new company called Altadis. This will be the fifth biggest tobacco group in the world after the Chinese National Tobacco Company, Philip Morris, British American Tobacco and Japan Tobacco. The combined group will have sales of around $5.3bn and annual profits of around $300m. Both groups have scheduled general meetings in November to get approval from shareholders. SEITA's current head Jean-DominiqueÊComolli will remain in charge of cigarette sales while Tabacalera's boss Cesar Alierta will run the cigar business.

The deal is unlikely to have major effect on SEITA's support for Prost Grand Prix with its Gauloises brand but it may have long-term implications in F1 as there is no doubt that Altadis will quickly begin to target other European firms to strengthen the group. The obvious targets are Britain's Gallaher and Imperial Tobacco, Germany's Reemtsma (which owns the West brand) and Austria Tabak. Other European companies have already been swallowed up with Portugal's Tabaqueira being bought by Philip Morris and Sweden's Swedish Match AB selling its cigarette operations to Austria Tabak.

A deal between Altadis and Reemtsma would be the most interesting in F1 terms as it could mean a choice between an F1 involvement with Prost or McLaren.

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