Joint Venture

British American Tobacco PLC
24 August 2001



            British American Tobacco secures joint venture in Vietnam

British American Tobacco has been granted a licence by the Vietnamese
Government to establish a $US40 million joint venture with the Vietnam
National Tobacco Corporation (Vinataba).


Vietnam's Ministry of Planning and Investment, the body responsible for
approving foreign direct investment projects, presented the licence to the
joint venture partners at a ceremony in Hanoi.


The joint venture is the first involving state-owned Vinataba, Vietnam's
biggest tobacco company, and a foreign partner. The joint venture is primarily
aimed at developing Vietnam's tobacco growing industry to international
standards, both in terms of yield and quality, leveraging off British American
Tobacco's expertise in environmentally-sustainable tobacco cultivation.


British American Tobacco-Vinataba (JV) Ltd. will also construct a tobacco
processing factory in Dong Nai, a province south of Ho Chi Minh City. The
factory will turn cured leaf into international-quality cut rag tobacco for
cigarette manufacture in local factories.


The joint venture will reduce the Vietnamese tobacco industry's reliance on
imported tobacco leaf and cut rag tobacco.


The processing facility will take approximately two years to build and, once
completed, will be the most modern tobacco-processing factory in Vietnam. It
will not manufacture cigarettes.


British American Tobacco was granted a licence to operate a branch in Vietnam
in 1994 to distribute State Express 555 and Dunhill brands contract
manufactured by Vinataba. The Group also has contracts with three other
Vietnamese tobacco companies to manufacture a range of international brands
including Craven A, White Horse, Everest and Virginia Gold.



ENQUIRIES:


Investor Relations:
Michael Prideaux
Tel: [phone]


Press Office:
David Betteridge
020 7845 2888


Background notes


*         Vietnam's tobacco industry is state-controlled, with cigarette stick
manufacture a state monopoly. Market share by volume is as follows: Vietnam
National Tobacco Corporation (57 per cent), other state-controlled provincial
factories (30 per cent), British American Tobacco brands (12 per cent) and
Philip Morris brands (one per cent).


*         All brands owned by international tobacco companies are manufactured
under contract by either Vinataba or one of the provincial factories.


*         British American Tobacco-Vinataba (JV) Ltd. is a milestone in
Vietnam's tobacco industry because it establishes British American Tobacco as
the only international tobacco company with a long-term legal status in
Vietnam.


*         Currently British American Tobacco, Philip Morris and Japan Tobacco
hold fixed-period (three-year) branch licence status in Vietnam, which
entitles them to trade the brands specified in each licence, all of which are
contract manufactured from imported materials by Vinataba.  The licences run
until 30 June 2003 and specify a condition that the international companies
are required to make progress towards meeting the Vietnamese Government's
requirements for localisation of materials. The new joint venture will make
substantial progress towards complying with the Vietnamese Government's
requirements in this regard.


*         British American Tobacco also has separate contract manufacturing
agreements with three provincial factories, which are also responsible for
trading the finished product, for the following brands: Craven A, White Horse,
Virginia Gold and Everest.


*         The market for cigarettes in Vietnam is around 58 billion sticks per
year.