Annual report 2010 - Imperial Tobacco Group

Lambert & Butler and Richmond remain our two best sellingUK brands, with Lambert & Butler kingsize the numberone brand variant in the UK. Our cigarette market sharewas 45.4 per cent (2009: 45.3 per cent).Our expertise in consumer value offerings has enabledus to further enhance market shares of JPS Silver andWindsor Blue which were up to 4.5 per cent and 4.4 percent respectively (2009: 1.9 per cent and 2.6 per cent).Combined, these two brands now hold around 41 percent of the growing economy segment.In fine cut tobacco, our volumes grew due to our valuebrands Golden Virginia Yellow and Gold Leaf although notenough to offset the performance of our premium brands,such that our overall fine cut tobacco share decreased to54.5 per cent (2009: 58.0 per cent).OutlookThe UK is a key market for the Group and we continue tofocus on improving our leading position. We expect the morenormal long-term rate of decline in the duty paid cigarettemarket to continue with further growth in fine cut tobacco.We will continue to drive sales growth by ensuring thatour brands and products evolve in line with changingconsumer dynamics.GermanyCigarette2010 2009Volumes 23.2bn 23.9bnMarket size 1 84.1bn 85.8bnMarket share 1 26.9% 27.3%1 Imperial Tobacco estimates.Fine Cut Tobacco2010 2009Volumes 5,900t 5,550tMarket size 1 25,450t 24,500tMarket share 1 18.2% 17.6% 21 Imperial Tobacco estimates.2 Restated to reflect a changed basis of calculation.Market Environment and Consumer TrendsIn Germany, we estimate that the duty paid cigarettemarket was down 2 per cent to 84.1 billion cigarettes(2009: 85.8 billion).The growing value for money branded cigarette sectornow accounts for 31 per cent of the total cigarette market(2009: 27 per cent) as consumers continued to economiseand seek value products and brands.The fine cut tobacco market was up 4 per cent to 25,450tonnes (2009: 24,500 tonnes).Excise and RegulationWe continue to proactively engage with the GermanGovernment in the ongoing debate regarding potentialtobacco tax increases. In Germany, with the exception ofBavaria, smoking restrictions by state are in place acrossthe hospitality sector that allows some provision for smokers.Our StrategyOur strategy in Germany is to balance market share gainswhile improving our profits.We use our unique total tobacco approach to provideconsumers with a wide range of fine cut and make yourown tobacco products, reinforcing our leading position inthis segment.Performance Highlights: GermanyA number of initiatives includingnew variants and soft packshave driven the share of JPSto 9.3 per cent.33