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UK tobacco giant Imperial to make cigars in Cuba again as communist island- state opens for business

UK tobacco giant Imperial to make cigars in Cuba again as communist
island- state opens for business
PUBLISHED: 20:56 GMT, 4 May 2016 | UPDATED: 20:56 GMT, 4 May 2016

FTSE 100 tobacco giant Imperial Brands is eyeing up a return to Cuba to
make high-end cigars now that the communist island- state has been
opened for business once more.

The US imposed a strict trade embargo on Cuba in 1962, but a visit by
President Barack Obama in March to encourage commerce and travel between
the countries heralds a thawing of relations and the possibility of
sanctions being lifted altogether.

Imperial has become the latest firm to express an interest in expanding
its business by taking production to Cuba.

It currently makes cigars for the US market in Dominican Republic. Chief
executive Alison Cooper said she sees the US as ‘a big growth
opportunity’ because consumers have more cash to spend because of the
low price of oil.

The cigarette industry is going through enormous upheaval as many
customers switch from tobacco to e-cigarettes.

It was dealt another blow yesterday when the European Court of Justice
approved new European Union rules that will require plain cigarette
packs, ban menthol cigarettes and regulate the growing electronic
cigarette market.

Tobacco companies had protested against the 2014 EU directive containing
the new rules, calling it disproportionate. But the EU’s top court
upheld the directive yesterday.

Firms such as Imperial are now looking for new ways to boost profits.

Imperial bought US brands Salem, Winston and Kool last year, which
helped to boost sales by more than 15 per cent to £3.4billion in its
first-half results.

Cooper said: ‘I am delighted with the performance of the US business.’

Imperial, whose other brands include Gauloises and Lambert & Butler
cigarettes, reported forecast-busting operating profit of £1.64billion
compared with £1.34billion in the same period of last year and said that
it is on track to meet full-year expectations.

A 10 per cent increase in the dividend was also announced.

Yesterday the shares fell 0.8 per cent, or 30p, to 3710p.

Imperial, which dropped tobacco from its title in an attempt to
diversify the business away from traditional cigarettes, said that
specialist products, such US cigars and Scandinavian chewing tobacco,
accounted for 14.4 per cent of sales and benefited from strong
performances in the first half.

Cooper was optimistic about the group’s Fotem Venture e-cigarette
business, which sells the second highest number of e-cigarettes in both
the UK and US markets, although less than 5 per cent of sales are to
people switching from regular cigarettes.

Elsewhere, sliding sales in the UK as healthier lifestyles and price
rises bite, were more than offset by more smokers in Italy and Japan.

Source: UK tobacco giant Imperial to make cigars in Cuba again as
communist island- state opens for business | This is Money –

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