Annual report 2004 (English) - PDF 3546K - Imperial Tobacco

32
Italy
A locomotive named Fortuna
The Italian market, which ranks second in Europe
in terms of sales volume, experienced a minor downturn
in sales in 2004, declining by 2% and ending the year
at 98.8 billion units. The most signifi cant event, however,
was a radical change in the market’s structure
as the result of new tax legislation.
On March 1, 2004, the government introduced
a minimum tax, which led to a tighter price tree,
and in mid-July decided to recalculate taxes every six
months in order to take price increases into account.
In response to these measures, several market players
repositioned their products, launches in the low-price
segment increased and a new, very-low-price segment
appeared. As a result, pressure on the most affordable
brands, which had already been heightened in 2003,
was intensifi ed even further.
Fortuna, which had been launched in May 2002,
benefi ted from this environment and drove Altadis’
overall sales, which grew by 18% and brought the
Group’s total Italian market share to 2.4%. With
considerable appeal because of its Latin image,
the brand is expanding in all regions of the country.
Its synergy with Gauloises Blondes, positioned
on the intermediate, more urban segment, in addition,
makes the pair a viable alternative to American
brands. The Gauloises Blondes image also benefi ted
from the brand’s association with the famous Italian
racer Valentino Rossi who – considered as the greatest
motorcycle champion of his generation – joined
the Gauloises Fortuna Yamaha team in 2004
and won the world championship title.
Poland
A diffi cult year
In 2004, Poland, along with nine other countries, joined
the European Union (E.U.). For the cigarette market,
this meant:
the disappearance of customs barriers with E.U.
countries as of May 1, 2004;
September 15 th implementation of the E.U. regulations,
in other words, the Byrne Directive on health warnings
and tar, nicotine and carbon monoxide content;
a substantial increase in tobacco taxes, which are
scheduled to rise by a factor of 2.5 by 2008. These”
new tax rules profoundly modifi ed the structure
of the Polish market, whose volume remained
at its 2003 level.
The year therefore presented many challenges for
Altadis Polska, which had to contend with increasing
sales of low-price products in the 70 mm segment,
which is its primary market. Volume losses in this
segment, in addition, could not be offset by the strong
drive made in the king-size segment. (The short, 70 mm,
cigarette segment slipped from 44% of the market’s