April 14 (Reuters) - Imperial Brands maintained its annual targets on Tuesday, driven by higher tobacco pricing and growth in its smoking-alternative products, but said the potential impact from the
Winston cigarette maker Imperial Brands warns on market share losses, shares drop
Imperial Brands Faces Market Share Challenges and Strategic Shifts
First-Half Performance and Market Share Losses
April 14 (Reuters) - Tobacco firm Imperial Brands warned of market share losses in its biggest markets, and only modest first-half profit growth, leaving it reliant on a stronger second half to meet annual targets and knocking its shares down more than 8% on Tuesday.
The maker of cigarette brands including Winston, Davidoff, and Gauloises, has focused on its core markets in recent years after it lost out to rivals during an unsuccessful foray into vapes.
Imperial's 48-basis-point market gain over the last five years has been fundamental to its rehabilitation, RBC analysts said in a note, adding that the expected decline in the first-half market share made them nervous.
Shares of the company were set to record their worst one-day percentage fall since September 2019, if losses hold.
Strategic Focus and Expansion Plans
Five-Year Strategy to Expand Alternatives Business
FIVE-YEAR STRATEGY TO EXPAND ALTERNATIVES BUSINESS
Under a five-year strategy set by his predecessor, Chief Executive Lukas Paravicini is seeking to expand Imperial Brands' higher-growth smoking alternatives business, while maintaining its traditional tobacco operations.
Competitive Positioning and Market Approach
Imperial Brands typically undercuts rivals such as British American Tobacco and U.S.-based Philip Morris International on pricing, while competitors have relied on premium branding and heavier innovation spending.
It now wants to focus on profitability over volumes, which it said would lead to modest market share losses across its five biggest markets: the United States, Germany, the UK, Spain and Australia in the first half of the year.
Industry Trends and Shifting Consumer Preferences
The broader sector is seeking to adapt to declining cigarette sales and a shift to alternatives, as consumers and new users increasingly switch to, or are drawn to, newer nicotine products such as vapes, heated tobacco and nicotine pouches.
Outlook and External Risks
Financial Guidance and Geopolitical Concerns
Bristol-based Imperial maintained its profit and net revenue outlook for 2026, but said the impact of the Middle Eastern conflict could disrupt second-half performance.
The company has not experienced any material business impact so far, it said, but since the U.S.-Israeli airstrikes were launched on Iran at the end of February, companies globally have been hit by a surge in energy and freight costs.
Strait of Hormuz and Inflation Risks
The near closure of the Strait of Hormuz has also clouded the economic outlook and heightened inflation risks.
Imperial will provide a further update on the situation in its first-half results announcement on May 12.
Reporting Credits
(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Barbara Lewis)
