Imperial Tobacco benefits from global economic downturn
Published on August 4, 2009 8:34 AM
Imperial Tobacco Group (IMT), the fourth largest tobacco company in the world by volume of sales, admitted that the company’s net profits rose because smokers hurt by economic downturn switched to cheaper cigarettes and roll-own tobacco. Another cause of an increase in revenues is the growth of cigarettes markets in Asian countries.
The Bristol-based cigarette tycoon, who owns such brands as maker Lambert & Butler (UK’s top selling cigarettes), West and Davidoff declared last week that it had obtained a better-than-expected earnings in the third quarter and anticipated to confirm the expectations for the complete fiscal year in Sept. 30.
IMT Chairman Gareth Davis said that the volatility and diversity of the company’s product line permits them to profit from the growth of sales of premium cigarettes and other tobacco products in developed markets, and at the same time helps to gain market share in developing markets with cheaper and mainstream brands.
Imperial Tobacco holds a leading position in the UK cigarette market with a 45 percent market share. Moreover, as the company spokesman said, the sales drop has slowed down since smokers stopped stocking up for cigarettes while on vacation abroad, because the economic downturn forced them to cut the expenses on traveling.
As regards international markets, IMT spokesman said that In France, cigarette sales rose by 2 percent since the consumers began recovering from last year’s ban on smoking in public venues and turned back to cigarettes again to distract from stress related to economic difficulties.
Success of roll-own tobacco.
The sales of loose tobacco used for rolling own cigarettes rose significantly in the UK and Spain during the last year. In the UK sales of loose tobacco went up by 15 percent; whereas Spain saw a dramatic 44 percent increase.
The essential shift to fine cut tobacco has as well been displayed in many countries throughout European Union, what resulted in higher profits for Imperial Tobacco than it had been anticipated earlier.
However, there were also bad news for the company as sales in Ireland, Hungary and the Czech Republic have dropped as the consumers cut the expenses on cigarettes due to difficult economic situation or stocked for cigarettes in neighboring countries.
Nevertheless the principal success was achieved in constantly growing markets of developing countries, mainly in Asian region, Indonesia, Cambodia, China and Laos where market shares of leading brands Davidoff and West grew and showed a better-than-anticipated performance.
IMT as well reported about a 10 percent drop in sales in US market, because of dramatic tax increases and strict smoking bans..
The Imperial Tobacco Group was founded in 1901, being one of the oldest tobacco companies in the world. Its market pr, the company has a market price is around 27.2 billion.
