November 11, 2009 / 5:05 PM / 10 years ago

Japan Tobacco to raise UK prices by 10p-12p a pack

* Plans price rises for Nov. 24

* Price of a 20-pack to go up by 10-12 pence

* Increases British market share

* Mayfair brand becomes Britain’s top seller

LONDON, Nov 11 (Reuters) - Japan Tobacco (2914.T) is to take advantage of the growing popularity of its British cigarette brands, such as number one seller Mayfair, by raising the price of a 20-pack by 10-12 pence from Nov. 24.

“The momentum is with us, the wind is behind us, and we should harvest that,” UK managing director of JT International Daniel Torras told reporters on Wednesday, adding higher tobacco leaf costs were behind the price rises.

The maker of Benson & Hedges and Silk Cut cigarettes in Britain said market share gains had prompted it to go ahead with price rises of nearly 3 percent now, as it looks to take the lead on pricing from arch-rival Imperial Tobacco IMT.L.

“Our goal is to be number one in the UK and we expect to close the gap over the next few years,” Torras said.

Rivals including Imperial and British American Tobacco (BATS.L) said they had no plans to follow the price rises.

Japan Tobacco bought British cigarette company Gallaher in 2007 and the world’s third-largest cigarette maker is spending over 80 million pounds ($134 million) in the four years to 2011 to boost market share in Britain, one of its top five markets.

Torras said JTI’s market share in Britain rose to 40.5 percent in the year to September from 39.3 percent in the prior year, while, his figures showed, Lambert & Butler maker Imperial fell to 42.6 percent from 44.0 percent.

Imperial gave a different figure on Tuesday with its annual results, saying its British market share fell to 45.3 percent in the year to September from 45.9 percent due to competition at the cheaper end of the market.

Imperial’s success over the past decade has come from its Lambert & Butler and Richmond brands as British smokers traded down to those cheaper brands, while Gallaher suffered due to the decline of its premium brands, Benson & Hedges and Silk Cut.

Torras said JTI’s increased focus on cheaper brands had seen its mid-price Mayfair beating Lambert & Butler to top spot in the British market with a monthly share of 14.4 percent in August 2009, while JTI’s Sterling was the top value for money brand ahead of Imperial’s JPS.

The price rises will add 12 pence to a pack of Sterling currently selling around 4.35 pounds ($7.28).

The value end of the market, which includes Sterling, Imperial’s JPS and Windsor Blue, and BAT’s Pall Mall, is the only sector of the British market in growth amid a slowly declining overall market.

The world’s largest cigarette group, Marlboro-maker Philip Morris International (PM.N), has around 7 percent share of the British market with its products being distributed by Imperial, while No. 2 BAT has around a 6 percent share. (Reporting by David Jones; Editing by Dan Lalor) ($1 = 0.5973 pound)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below