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Imperial Tobacco counts its profits, will continue to sell more cigarettes

7 February 2022

On February 2, UK-based tobacco company, Imperial Brands, held its 2022 annual general meeting celebrating its successes, outlining its plans for the next five years and assuring its shareholders of continued profits. Imperial reported an annual operating cash flows of more than £3bn (US$4bn) a year and over the next five years it anticipates to generate about £18bn (US$24bn).

Imperial’s 2021 annual report refers to the cigarette brands it will be focusing on in five high income countries, referring to them cryptically as “jewel brands”. But Imperial has plans for developing countries too. Imperial’s plan for Africa is to turn them “from an unloved asset to a platform for future growth.” The African region continues to be an attractive portfolio of markets for Imperial with opportunities for further growth, especially in Burkina Faso and the Côte d’Ivoire, who are among the poorest countries in Africa.

Since cigarettes form the bulk of Imperial’s profits, these will continue to remain important for Imperial’s tobacco business and provide reliable profit growth with high cash returns. Imperial has a plan to increase its cigarette sales significantly over time. Imperial states, “We also see opportunities to rejuvenate our local jewel brands where we can capitalise on the strength of our local brand equity.”

Demystifying and decoding Imperial’s text in its report to investors:

  • “Tobacco value creation model still robust”, meaning, Imperial can continue to expand sales.
  • “Affordability is good supporting continued pricing power”, meaning, it is important to keep cigarettes cheap (oppose tax increase).
  • “Strong brand loyalty”, meaning, its customers are addicted to their cigarettes and will continue to buy them.
  • “Regulatory risks ongoing but are manageable”, meaning, while governments impose tobacco control measures, Imperial can influence these efforts.

Table 1 shows Imperial’s presence in the ASEAN region. It has the biggest presence in Lao PDR through its joint venture with the Lao government and controls 79% of the cigarette market. It also controls a significant share of the cigarette market in Cambodia.

Table 1: Imperial Tobacco’s presence in the ASEAN region


Imperial Brands Plc

Controls 25% of cigarettes market

Lao PDR Lao Tobacco Ltd

Imperial Tobacco is majority owner of LTL; controls 79% of cigarette market;

Manufacturing facility in Vientiane


Philippines Bobbin Corp

Manufacturing/processing tobacco wrappers for cigar industry


Imperial Tobacco Asia Pte Ltd

Wholesale distribution of tobacco products to Singapore and other Asian countries including Malaysia & Indonesia

Imperial Brands Plc

Control 7% cigarettes market;

Manufacturing facility in Ho Chi Minh City

Ref: pg 6

In 2001, Imperial signed a 25-year Investment License Agreement (ILA) with the Lao government to privatize the country’s state-run tobacco monopoly into a joint venture. But the ILA is skewed to benefit Imperial and provides several benefits including a cap on taxes on cigarettes. Through this agreement, between 2002 and 2019, Imperial has legally avoided paying $142.9 million in taxes. They will continue to avoid paying $22.31 million if tobacco production volume and the tax collected are the same amount as 2019.  

Additionally, Imperial has not abided by Lao’s tax law and has refused to pay specific tax of 600 Lak/pack and dedicated tax to Lao’s Tobacco Control fund. As cigarettes continue to remain cheap in Lao PDR, about 7,000 people die every year from tobacco related diseases.

While Imperial is assuring its shareholders that it is transforming its business towards “a healthier future”, its business in Lao PDR is all about selling more cigarettes as cheaply as possible to more people and avoid paying taxes.

More than 73,000 adolescents and half of all Lao men smoke. About 3 billion sticks of cigarettes are expected to be sold in Lao PDR in 2022. Lao PDR must end the lopsided agreement with a harmful industry, protect public health and stop the preventable deaths.