Imperial Tobacco sales down in EU as air travel declines

Andrew Pentol

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The supplier attributes fall in UK and EU tobacco sales to a reduction in overseas travel and duty-free sales

Imperial Tobacco has attributed a fall in tobacco sales in the UK and the rest of the European Union (EU) for the year ending June 2009 to a reduction in foreign travel and lower duty-free sales. Despite the decline, the company said sales for the financial year ending September 2009 remain in line with expectations.

Cigarette sales in Spain were down by about 4% in the 12 months to June 2009 year on year owing to a decline in airport sales and Spanish smokers trading down to ryo tobacco. In the UK, the annual duty-paid cigarette market declined by about 1% during the same period owing to fewer purchases of UK brands abroad because of a decline in overseas travel, and a weaker economy and currency. But the UK fine-cut tobacco market grew as more smokers decided to roll their own cigarettes. In the rest of the EU regional market, sales volumes were down by 5% in the year to June 2009 as a result of duty increases in Poland and the Czech Republic.

In the rest of the world, the company continued to increase sales volumes and market share . Davidoff volumes increased by 21%, with Gauloises sales up by 10%, Gitanes by 33% and Fine by 25% in the nine months to June 2009. Sales in the US for the three months to June 30 2009 have dropped by 10% year on year owing to a significant increase in federal excise taxes on all tobacco products.

Imperial Tobacco CEO Gareth Davies said: “We have delivered another good performance in our third quarter, driving sales throughout our enlarged geographic footprint and achieving further volume and share growth across our regions. The versatility of our balanced portfolio is enabling us to benefit from  growth in value cigarette and fine cut tobacco brands in mature markets, while continuing to develop our mainstream and premium cigarette brands in emerging markets.

“Despite the challenges of the wider operating environment, we anticipate another successful year, with the Altadis integration progressing well and  our cash conversion expected to exceed 100%,” he concluded.