Smoker's light upon cheaper cigarettes
Apr 27 2010 By Kelly Macnamara
LAMBERT & BUTLER firm Imperial Tobacco today said economy cigarettes now account for around 20% of the total UK market as nicotine junkies turn to cheaper smokes to fuel their habit.
The global tobacco giant, which holds over 45% of the 44.2 billion cigarette a year UK market, said consumer downtrading "appears to have accelerated" following the increase in VAT in January.
Smokers are also rolling their own cigarettes to save money, with the UK fine cut tobacco market growing 18% to 4,850 tonnes on an annualised basis.
The firm said its JPS Silver and Windsor Blue brands continued to grow in the six months to March 31, and now account for around 40% of the low cost segment.
Imperial said consumers were already economising before the recession hit, driven by higher taxation, but this trend "picked up some pace" in the economic downturn.
The firm grew UK revenues 7% to £448 million in the half year as volumes grew and prices improved. Operating profits were also up 7% to £295 million.
Overall, Imperial said its loose tobacco volumes grew 9.5% as it capitalised on downtrading in the European Union.
Cigarette volumes were 3.7% lower in the first half, at 146.9 billion, as market weakness in the US, Spain and Russia hit performance.
Imperial said when its fine cut tobacco and cigarettes were combined, volumes were down 2.1%, which it said was a "pleasing performance".
The Bristol-based company saw revenues rise 4% to £3.4 billion, while adjusted pre-tax profits were up 15% to £1.2 billion.