Newer Nicotine and Tobacco Products: Imperial Brands

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Since the early 2000s transnational tobacco companies (TTCs) have developed interests in newer nicotine and tobacco products, including e-cigarettes (also known as electronic delivery systems, or ENDS), heated tobacco products (HTPs), snus and nicotine pouches.
Companies have referred to these types of product as ‘next generation products’ (NGPs) although terminology changes over time.

As the harms from conventional products have become better understood, and tobacco control measures have been put in place, the cigarette market – from which tobacco companies make most of their profits – has started to shrink. To secure the industry’s longer-term future, TTCs have invested in, developed and marketed various newer products, including in low and middle-income countries.1  They are often publicly linked to tobacco companies’ harm reduction strategies and labelled ‘reduced risk’ or ‘modified risk’ products.

There is ongoing scientific and policy debate about the role of these products in tobacco control, with concerns around long term health effects, marketing to youth, and how this diversification may help the industry to build credibility and influence  policy makers.12

It is important to note that, despite increasing investment in these products, the core of the global tobacco industry’s business remains unchanged. Newer products form a small proportion of their revenue, compared to conventional products, and will do so for the foreseeable future.

Imperial Brands was previously known as Imperial Tobacco, and for simplicity is referred to below as Imperial.

Background

Imperial, like other tobacco companies, has been investing in tobacco and nicotine products that, unlike cigarettes, show potential for volume growth in developed markets.3 It has used terms like “new consumer experiences”4, “consumer adjacencies”5and “potentially harm reduced products” to describe its .6Products sold by Imperial that fall into this category are snus, nicotine pouches, e-cigarettes, and heated tobacco products (HTPs).

In 2018, Imperial underlined the importance of these products to the company’s future:7

“While our core business remains the manufacture and sale of high quality cigarette and other tobacco product brands for millions of adult consumers worldwide, NGPs offer us considerable growth opportunities.”

However, in 2019, Imperial issued a profit warning, and under pressure from shareholders, a leadership change followed.8 Following the appointment of new CEO Stefan Bomhard in July 2020, Imperial released a new five-year business strategy which scaled back the company’s plans to invest in newer products in favour of conventional cigarettes.910

In January 2022, Imperial continued to use the industry-favoured term “Next Generation Products” while also now describing them as “potentially reduced harm products” on its website.1112 It has also used terms like “new consumer experiences”13 and “consumer adjacencies” when referring to these products.14

Snus

E-cigarettes

In December 2012, Imperial set up a wholly owned Dutch subsidiary called Fontem Ventures to develop “non-tobacco consumer experiences”, notably e-cigarettes.1516 In November 2017, the tobacco company also acquired UK-based nicotine liquids maker Nerudia.17

Imperial initially sold multiple e-cigarette brands, but from 2016 its strategy has focused on growing the blu brand.18.

In February 2018, Imperial launched a brand extension named myblu, based on a liquid pod format, in the US, UK, France, Germany and Russia.19

Since 2020, Imperial has focused its e-cigarette business on the US, the largest market for these products, while planning to exit the least profitable markets.9

The company said that it planned to launch new liquids and another brand extension in the second half of 2018, called bluACE , an open system e-cigarette.19  However, the product appeared to have been swiftly withdrawn. According to Imperial’s previous Chief Executive Officer, Alison Cooper, the company has sent e-cigarettes to social media influencers. In an interview with The Sunday Times in April 2019, Cooper said: “You have a lot of vape influencers in the US.”20  Cooper said that Imperial had trained thousands of “brand ambassadors” to promote vaping, adding that it only uses the social media strategy to reach adult smokers.20

Heated Tobacco Products

Unlike its competitors, Imperial has shown little appetite to develop and market heated tobacco products (HTPs).2122 Whereas Philip Morris International (PMI) and British American Tobacco have stressed the ‘reduced risk’ potential of HTPs,2324 Imperial has publicly challenged the HTP reduced risk claim, asserting that “there’s no difference really between those products and traditional tobacco products” and “It’s probably better described generically as ‘heat and burn’ rather than ‘heat not burn'”.22

In 2015 Imperial scientists published a study in the Environmental Analytical Chemistry journal that concluded that PMI’s IQOS released tobacco-containing side stream emissions, and recommended that HTPs should be covered by smoke-free legislation.25

Market analysts and investors have criticised Imperial for not venturing into the HTP category.26Perhaps bowing to shareholder pressure, Imperial’s chairman, announced in February 2018 that the company had “multiple formats under development”, and that it had trialled them in Europe and Japan.2728 In May 2018, the company further reported that it was “progressing optionality in heated tobacco, with second stage consumer trials planned in the next few months”.19

In April 2019 Imperial announced that it would start selling its HTP device, called Pulze, from May 6 in the city of Fukuoka in Japan.29 (PMI and Japan Tobacco products dominate the Japanese HTP market, where e-cigarettes containing nicotine are banned. For details see Heated Tobacco Products.)

Accordingly, Imperial’s public stance on the harm reduction  potential of HTPs changed, stating that heated tobacco “releases nicotine and other tobacco emissions at substantially lower levels than cigarettes”.30 It characterised Pulze as a “potentially harm reduced alternative”.31

In 2020, Imperial announced it would market its HTP in Europe, trialling it in two unspecified European countries.9
In September 2021, it began test marketing Pulze in the Czech Republic and Greece.3233 Its iD heat sticks went on sale in four flavours: “Rich Bronze, Balanced Blue, Capsule Polar, and Ice”.33

Investment in Cannabis

Since 2018, Imperial has also developed interests in medicinal cannabis. Find out more on the Cannabis page.

TobaccoTactics Resources

Relevant links

TCRG Research

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

  1. abSTOP, Addiction At Any Cost: The Truth About Philip Morris International, 20 February 2020, accessed January 2021
  2. S. Peeters, A.B. Gilmore, Understanding the emergence of the tobacco industry’s use of the term harm reduction in order to inform public health policy, Tobacco Control, 2015; 24:182-189, doi:10.1136/tobaccocontrol-2013-051502
  3. Euromonitor International, Global Tobacco Key Findings Part 2: Vapour Products. August 2016
  4. M. Phillips. Quality Growth- New Consumer Experiences. Imperial Brands Investor Day, 8 June 2016
  5. O. Tant, Investing for Growth. Imperial Brands presentation. Barclays Global Consumer Staples Conference. Boston, September 2017
  6. Imperial Brands, Potentially Harm Reduced Products, undated, accessed August 2021
  7. Imperial Brands, Next Generation Products: Overview, Imperial Brands website, 2018, accessed February 2018
  8. BBC News, Imperial Brands, BBC Market Data website. 5 February 2020, accessed August 2021
  9. abcdImperial Brands, Our Transformation to Unlock Value: Capital Markets Event, 27 January 2021, accessed March 2021
  10. P. Nilsson, Imperial Brands turns focus back to cigarettes, Financial Times (behind paywall), 27 January 2021, accessed August 2021
  11. Imperial Brands, Potentially Reduced Harm Products, website, undated, accessed January 2021
  12. Imperial Brands, Next Generation Products, website, undated, accessed January 2022
  13. M. Phillips. Quality Growth- New Consumer Experiences. Imperial Brands Investor Day, 8 June 2016
  14. O. Tant, Investing for Growth. Imperial Brands presentation. Barclays Global Consumer Staples Conference. Boston, September 2017
  15. Imperial Brands, Annual Report and Accounts 2016, Delivering Against Our Strategy.
  16. A. Cooper, R. Dyrbus, Sustainable Growth; Growing Cash Returns presentation, Imperial Brands Investor Day 26 February 2013, accessed April 2017
  17. Reuters, Imperial Brands buying UK nicotine liquids maker Nerudia, 1 November 2017, accessed February 2018
  18. Fontem Ventures, blu website, undated, accessed May 2017
  19. abcImperial Brands, Interim Results for the six months ended 31 March 2018: Delivering our strategy in tobacco and NGP, Imperial Brands website, 9 May 2018, accessed May 2018
  20. abS.Meddings Interview: Imperial Brands’ Alison Cooper sees light at the end of tobacco road ,The Sunday Times, 14 April 2019, accessed April 2019 (behind paywall)
  21. Tobacco Reporter, Imperial shuns concept of heat-not-burn products, 7 May 2015, accessed February 2018
  22. abM. Geller, Imperial shuns ‘heating products’ pushed by Big Tobacco rivals, Reuters, 6 May 2015, accessed February 2018
  23. Reuters, FDA’s tobacco stance faces test with Philip Morris iQOS device, 22 January 2018, accessed February 2018
  24. British American Tobacco, Developing less risky products, undated, accessed February 2018
  25. G. O’ Connell , P. Wilkinson, K.M. Burseg, et al. Heated tobacco products create side-stream emissions: implications for regulation. J Environ Anal Chem, 2015;2:2380-91
  26. T. Boles, Imperial Brands is expected to reassure the market with new next generation products, cityam.com, 5 November 2017, accessed February 2018
  27. Imperial Brands, AGM Update, 7 February 2018, accessed February 2018
  28. M. Williamson, Presentation at the Annual General Meeting 2018. 7 February 2018. Accessed February 2018
  29. L.Du and G.Huang, Imperial Brands jumps into Japan’s crowded heated-Tobacco Market, Bloomberg Technology, 25 April 2019, accessed May 2019
  30. Imperial Brands, 2018 Annual Report, 2018, Accessed August 2021
  31. Imperial Brands Science, Pulze: the science of heat not burn. 30 September 2020, accessed August 2021
  32. Imperial Brands, Pulze and iD heated tobacco products launched in Czech Republic, press release, 1 September 2021, accessed September 2021
  33. abImperial Brands: Market trials underway for heated tobacco products, Market Screener, 9 September 2021, accessed September 2021
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