Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point

In Depth

On Air

Low Graphics

Tuesday, May 11, 1999 Published at 17:09 GMT 18:09 UK

Business: The Company File

One in six UK cigarettes foreign

Cigarette profits are anything but up in smoke

One in six cigarettes smoked in the UK is bought abroad, according to Imperial Tobacco.

The maker of John Player, Embassy and Lambert & Butler says it expects the fall in UK cigarette sales to accelerate further in the next few years.

Chief executive Gareth Davis, who lit up shareholders' spirits by posting another set of record profits, said the £10bn UK market had already slumped dramatically.

[ image: Foreign sales have helped it to record profits]
Foreign sales have helped it to record profits
"The UK market is declining by around 8%, and we envisage this increasing to show a 10% fall because of the tax position," he said.

There are 66 billion duty-paid cigarettes sold in the UK now, down from 72 billion from the previous year.

But the non duty-paid market, both legally bought abroad and illegally smuggled, rose to around 12-13 billion cigarettes.

Mr Davis estimated that a third of these cigarettes bought abroad are bootleg.

Rizla sales high in Europe

The UK government strategy is to increase the duty on cigarettes by 5% above inflation to discourage smoking.

But Imperial said the evidence appears to show a rapid rise in illegal imports has been one obvious result.

The British tobacco industry has seen a duty rise of 39p for a pack of 20 premium-priced cigarettes in the last six months.

That has pushed the typical price of a packet of 20 cigarettes to £3.79, compared to around £2 in France, and less in other European countries.

Imperial has enjoyed success by following the trail of UK smokers abroad, with its international operations doubling profits in the six month period.

The Dutch-based Drum hand rolling tobacco business it bought last year and its Rizla cigarette papers sales across Europe were two of its brighter performers.

And despite warning about the declining UK market the group still managed to improve its share of sales by 0.6% to 37.9%, although UK operating profits fell by £2m to £152m.

Imperial said it had maintained the number one brand positions in cigarettes, roll-your-own tobacco, pipe tobacco and cigarette papers, with the number two position in the cigar market.

The group's overall pre-tax profits were up 25% to £183m in the six months to March 27. Its shares closed up 32p at 687.5p.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Company File Contents

Relevant Stories

30 Nov 98 | The Company File
Overseas sales light up tobacco group's profits

In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles