Next Generation Products: Imperial Tobacco

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Imperial Tobacco, like other tobacco companies, has been investing in tobacco and nicotine products that, unlike cigarettes, show potential for volume growth in developed markets.1

These products are referred to as Next Generation Products (NGPs) and are often publicly linked to tobacco companies’ harm reduction strategies. Imperial Tobacco has also used the terms “new consumer experiences”2 and “consumer adjacencies”3 to describe NGPs

Products that fall into this category are snus, e-cigarettes, and heated tobacco products (HTPs).

On its website, Imperial Tobacco underlined the importance of NGPs to the company’s future:4

“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.”


Imperial Tobacco’s NGP investments started in 2005 when the company invested in a Swedish smokeless tobacco product called snus. It also markets tobacco leaf-free nicotine pouches.

Although the company continues to have snus interests, the focus of its NGP investments switched to e-cigarettes in late 2012.


In December 2012, Imperial Tobacco set up a wholly owned Dutch subsidiary called Fontem Ventures to develop “non-tobacco consumer experiences”, notably e-cigarettes.56 In November 2017, the tobacco company also acquired UK-based nicotine liquids maker Nerudia.7

Imperial initially sold multiple e-cigarette brands, but from 2016 its NGP strategy has focused on growing the blu brand.8

In February 2018, Imperial launched a brand extension named myblu, based on a liquid pod format, in the US, UK, France, Germany and Russia.9 The company has said that it plans to launch new liquids and another brand extension in the second half of 2018, called blu ACE, an open system e-cigarette.9 According to Imperial’s Chief Executive Officer Alison Cooper the company sends 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.”10 But Cooper added that Imperial uses the social media strategy to reach only adult smokers. Cooper also said that Imperial has trained thousands of “brand ambassadors” to promote vaping.10

Heated Tobacco Products

Unlike its competitors, Imperial Tobacco has shown little appetite to develop and market Heated Tobacco Products (HTPs).1112 Whereas Philip Morris International (PMI) and British American Tobacco have stressed the ‘reduced risk’ potential of HTPs,1314 Imperial Tobacco 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'”.12

In 2015 Imperial Tobacco 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.15

Market analysts and investors have criticised Imperial Tobacco for not venturing into the HTP category.16

Perhaps bowing to market pressure, Mark Williamson, 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.1718 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”.9 In April 2019 Imperial announced that it would start selling its Pulze device from May 6 in the city of Fukuoka in Japan.19

Investment in Medicinal Cannabis

Since 2018, Imperial Tobacco has dabbled in medicinal cannabis. In April 2018 Imperial invested in Oxford Cannabinoid Technologies (OCT) which describes itself as managing “a wide-ranging research program that investigates the medical potential of cannabinoids across different therapeutic areas.”20 OCT is licensed by the Home Office.
Matthew Phillips, Chief Development Officer at Imperial, said: “We are pleased to be partnering with OCT. Cannabinoid products have significant potential and our investment enables Imperial to support OCT’s important research while building a deeper understanding of the medical cannabis market.”2122

In an interview in April 2019, Imperial’s Chief Executive Officer Alison Cooper refused to disclose the amount invested in OCT but said that it was an “interesting area to look at”.10

In September 2019, a “partnership agreement” was finalised between Imperial Tobacco and Canadian cannabis producer Auxly Cannabis Group.2324 As part of the deal, Imperial paid GB£85 million to acquire 19.9% stake in Auxly. Imperial will also give Auxly “worldwide licences for its vaporization technology” and access to its subsidiary Nerudia.23 Auxly has also become “an exclusive partner for Imperial’s cannabis-related business activities”.23 It is unclear whether this arrangement precludes Imperial Tobacco from making further partnership deals with cannabis companies.

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Relevant links

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  1. Euromonitor International, Global Tobacco Key Findings Part 2: Vapour Products. August 2016
  2. M. Phillips. Quality Growth- New Consumer Experiences. Imperial Brands Investor Day, 8 June 2016
  3. O. Tant, Investing for Growth. Imperial Brands presentation. Barclays Global Consumer Staples Conference. Boston, September 2017
  4. Imperial Brands, Next Generation Products: Overview, Imperial Brands website, 2018, accessed February 2018
  5. Imperial Brands, Annual Report and Accounts 2016, Delivering Against Our Strategy.
  6. A. Cooper, R. Dyrbus, Sustainable Growth; Growing Cash Returns presentation, Imperial Brands Investor Day 26 February 2013, available from:, accessed April 2017
  7. Reuters, Imperial Brands buying UK nicotine liquids maker Nerudia, 1 November 2017, accessed February 2018
  8. Fontem Ventures, blu website, undated, accessed May 2017
  9. 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
  10. abcS.Meddings,Interview: Imperial Brands’ Alison Cooper sees light at the end of tobacco road,The Sunday Times, 14 April 2019, accessed April 2019
  11. Tobacco Reporter, Imperial shuns concept of heat-not-burn products, 7 May 2015, accessed February 2018
  12. abM. Geller, Imperial shuns ‘heating products’ pushed by Big Tobacco rivals, Reuters, 6 May 2015, accessed February 2018
  13. Reuters, FDA’s tobacco stance faces test with Philip Morris iQOS device, 22 January 2018, accessed February 2018
  14. British American Tobacco, Developing less risky products, undated, accessed February 2018
  15. 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
  16. T. Boles, Imperial Brands is expected to reassure the market with new next generation products,, 5 November 2017, accessed February 2018
  17. Imperial Brands, AGM Update, 7 February 2018, accessed February 2018
  18. M. Williamson, Presentation at the Annual General Meeting 2018. 7 February 2018. Imperial Brands, Bristol
  19. L.Du and G.Huang, Imperial Brands jumps into Japan’s crowded heated-Tobacco Market, ‘Bloomberg Technology’, 25 April 2019, accessed May 2019
  20. Oxford Cannabinoid Technologies,About Us, undated, accessed April 2019
  21. Imperial Brands, Imperial Brands Ventures Ltd announces investment in Oxford Cannaboid Technologies, Press Release 28 June 2018, accessed October 2019
  22. Tobacco giant Imperial Brands invests in medical cannabis, BBC News, 28 June 2018, accessed October 2019
  23. abcR. Harris, Tobacco companies invest in cannabis, Time Bulletin, 29 September 2019, accessed October 2019
  24. Auxly Cannabis Group, Auxly Closes C$123 Million Investment and R&D Partnership with Imperial Brands and Strengthens its Board, 25 September 2019, accessed October 2019