Imperial Brands looks to UK market for growth by investing in new products

Tobacco giant Imperial Brands is aiming to grow its annual profits by between 3-5% over the next five years, with the UK one of its target markets.

The group, which has its global HQ in Bristol, said it also expects to deliver low-single digit revenue growth from its tobacco products, with its next-generation products (NGP) – including vapes and heated tobacco systems – achieving a double-digit revenue uplift.

At a capital markets day for investors, the group behind brands such as Davidoff, West, Drum and Rizla, said it had chosen to continue focusing on its five largest markets for this growth – the US, Germany, Spain and Australia along with the UK – which currently represent around 70% of all its adjusted tobacco operating profit.

It said over the next five years they would continue to contribute most of its earnings.

“Within these markets, we have identified specific areas for further investment by category, brand and sales channel,” the group told shareholders.

“Our objective will be to continue to maintain our aggregate market share across these five markets with the aim of driving sustainable growth and cash delivery.

“By applying this same performance-driven, consumer-led approach to our wider portfolio of tobacco markets, we expect them to make a greater contribution to our overall performance over the next five years.”

Imperial, the world’s fourth largest multinational tobacco company by market share, is also the largest producer of fine-cut tobacco and tobacco papers.

In the UK it is best known for its John Player Special and Lambert & Butler cigarettes, Golden Virginia tobacco and Rizla rolling papers.

Like its major competitors, it has invested heavily in non-tobacco products, including vaping-style gadgets, in Imperial’s case that includes the blu brand.

According to Imperial Brands chief executive Stefan, the 2030 strategy built on its current five-year plan, which he said had “created a better business delivering a stronger, more consistent operational and financial performance, and excellent returns for shareholders”.

It would further strengthen its combustible and NGP businesses, generating sustainable growth and long-term value for shareholders, he added.

“We will maintain our distinctive challenger approach, which is about developing a deep understanding of our consumers, equipping our people to perform with agility and choosing to focus on our biggest levers of growth,” he said.

“We will continue to upgrade our capabilities, creating differentiated brands, a high-performance culture and a more efficient organisation led by data.

“This will support growth in combustibles, where we will continue to focus on the five largest markets accounting for around 70% of adjusted operating profit, and NGP, where we will retain our disciplined investment and market entry criteria.”

Imperial Brands operates 30 factories worldwide with around 25,000 employees while its products are sold in around 120 countries.

As well as its headquarters in Bristol and an office in London, it also has ‘Sense Hubs’ in Liverpool, Hamburg and Shenzhen to help it develop next generation products.

It closed its last UK factory in Nottingham in 2016.

Its heated tobacco system products include the Pulze and iD brands. Imperial also produces nicotine pouches under the Zone X and Skruf brands.