Imperial Tobacco to Introduce Cigarette Alternative Next Year

Imperial Tobacco Group Plc, Europe’s second-biggest tobacco company, plans to introduce an alternative nicotine product next year in an effort to catch up with competitors such as British American Tobacco Plc.

Imperial is “on track to launch our own products in 2014” through the Fontem Ventures unit, the Bristol, England-based company said today in a statement as it reported a 1 percent drop in underlying revenue in the nine months ended June 30.

“This is the first time Imperial has confirmed that it plans to launch something in that space next year,” said Erik Bloomquist, a tobacco analyst at Berenberg Bank in London. “It’s an important step forward for the company.”

Imperial has been trailing the likes of BAT and Philip Morris International Inc. in developing alternative nicotine products and electronic cigarettes in response to stricter government constraints on smoking.

Imperial shares rose as much as 3 percent in early London trading, the steepest intraday gain since May 2. The stock was up 2 percent at 2,198 pence at 8:27 a.m.

The “required development” of e-cigarettes could help boost Imperial Tobacco’s sales outlook, Nomura International analyst David Hayes said in a note before today’s announcement.

BAT last month started selling Vype electronic cigarettes online in the U.K. and is anticipating the country’s approval by the end of the year for another alternative product that delivers nicotine via aerosol technology. Imperial Tobacco has so far declined to say what kind of products it is developing.

Plain Packaging

The maker of Davidoff and Gauloises Blondes reported its first drop in earnings in 17 years in the first half of the year as the euro crisis weighed on sales growth.

“Whilst opportunities to grow sales in the short term are being impacted by the environment challenges, we remain focused on generating high quality returns and sustainable growth from our portfolio,” Chief Executive Officer Alison Cooper said today. “Our full-year expectations remain unchanged.”

The U.K. market leader has also campaigned against the possible introduction of plain packaging in its home country and scored a victory July 12 when Health Minister Jeremy Hunt announced that the government needs more time to assess the effect of a similar policy in Australia.

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