Specialist
Former General Manager at Imperial Brands plc
Agenda
- European combustible cigarette and NGP (next-generation product) market landscape and trends
- Imperial Brands brand portfolio positioning across cigarettes and NGP
- Strategic growth initiatives and key market opportunities
- H2 2021 outlook and potential structural industry changes
Questions
1.
Could you highlight some of the key trends you have noticed within the European combustible and NGP [next-generation product] market over the past 12 months? What were the key trends before coronavirus and how has coronavirus impacted this market?
2.
Was there a rebound in combustible performance and volumes in the consumption trends amid coronavirus and was this more significant than what was happening on the NGP and the vapour side?
3.
What are your thoughts on the trends around cigarette consumption in Europe? As we know, cigarettes and volumes have been declining. Do you think we should expect an acceleration in the decline over the next five years, as older consumers leave the market and are not replaced by younger consumers? How should we assess this combustible decline? Do you think it will be quite stable?
4.
Is there any difference in the lifetime value of a combustible smoker vs reduced-risk product smokers? Are you noticing that reduced-risk product smokers stay within the industry as long as traditional tobacco smokers, and are the companies able to get as much value out of these consumers as the combustible consumers?
5.
In various markets where combustibles are regularly smoked, are there any notable consumer preferences that would suggest that reduced-risk products will do well in those markets? One trend is that HTPs [heated tobacco products] seem to succeed in gaining share in countries with high nicotine preferences. Do you think this is true?
6.
Imperial Brands pointed at targeting five key countries, being US, UK, Spain, Germany and Australia. Do these regions make sense for Imperial to target? Is there still upside for Imperial in these regions, and are there any nuances that we should understand as Imperial tries to further penetrate and grow within these regions?
7.
How do you assess the strength of the key brands in Imperial’s portfolio relative to its competitors? Do you think they are quite strong given the price point they play, or are these brands losing or gaining brand equity in that sense?
8.
What is your outlook for pricing and the various price segments of cigarettes in Europe? Do you think premium will outperform value for money? Which pricing do you think is best placed to win and what does it mean for Imperial, given that it has very much targeted that value-for-money segment?
9.
Do you expect Imperial to try to increase its brand equity before these price regulations might start happening? Should we monitor this, for further investment behind the brands, or do you expect the investment to still be continued to those reduced-risk products?
10.
Do you think there will be some cost-cutting pressures coming through the tobacco chain and value chain for the big players as well as Imperial? Do you think this could be a headwind we should monitor?
11.
Do you think there is still a lot of room for governments to increase tax in the key markets within Europe, and especially given coronavirus? I’m sure some governments have tried to recoup some of the funds used for the coronavirus relief? Is there still a lot of headroom for taxes to increase?
12.
How elastic do you think demand is to further price increases for the European consumer? How much run rate is there for these brands to continue increasing prices until demand starts dropping off at an accelerated rate?
13.
Would you expect a weakened consumer environment? If we move into a recession with furlough schemes and such ending in France as well as the UK, do you think this could negatively impact the strong pricing within cigarettes and that demand?
14.
What is happening with Imperial’s reduced-risk products? They seem to be lagging behind those of the other players such as BAT and Philip Morris. What are some of the struggles it has had with vape and heat not-burn products? Is there any sense in Imperial turning this around?
15.
Do you think there is still room and opportunity for Imperial to compete in these reduced-risk products and do you think it’s still worthwhile putting the investment in there and going after that market? Alternatively, do you think the brand names such as IQOS and BAT’s Glo are almost too far ahead?
16.
What do you think of the new management team and leadership given your knowledge of Imperial? Do you think that it’s the right fit and a good refresh for Imperial?
17.
Do you think Imperial would ever try to enter any emerging markets such as Africa, LATAM and Asia, with a greater presence, greater boost from the company and from management, given that it plays in that value segment and those are quite low-priced markets where its products might suit better?
18.
Who of the big players, Imperial, Japan, PMI and BAT, do you think is best positioned to outperform the market over the next five years and why?
