13 October 2021

Imperial Brands

Imperial Brands (IMB) is a multinational nicotine (née tobacco) company. They are the fourth largest nicotine company globally, and their largest markets are the USA and Germany. The Tobacco & Next Generation Products (NGP) division is the larger of IMB’s two and accounts for 88% of revenues.

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‘Tobacco’ is the sale of traditional combustibles (e.g. cigarettes) and ‘NGP’ refers to the sale of generally “less harmful” vapour products. 

IMB has struggled recently; in addition to an inhospitable regulatory environment for its traditional combustibles, they have struggled to get a handle of the NGP market and consumer. A new chair and CEO were appointed in 2020, and the business underwent an in-depth market analysis to identify strong growth drivers and, perhaps more importantly, which initiatives to abandon. For example, IMB cancelled an initiative introducing NGPs to some of their larger combustible markets as a result of poor consumer uptake. Subsequently, they have expanded the salesforce for combustibles in their largest markets.

IMB’s challenge now is executing these new strategies. However well they execute though, the tobacco industry is ultimately in structural decline as global tobacco sales volumes decline c.4% per annum globally.

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