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 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."

In late 2017 Imperial stated that 2018 would see a series of NGP launches in both new and existing markets.[4]


Imperial Tobacco's NGP investments started in 2005 when the company invested in a Swedish smokeless tobacco product called snus.

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.[5][6] 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]

Heated Tobacco Products

Unlike its competitors, Imperial Tobacco has shown little appetite to develop and market HTPs.[10][11] Whereas Philip Morris International (PMI) and British American Tobacco have stressed the 'reduced risk' potential of HTPs,[12][13] 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'".[11]

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.[14]

Market analysts and investors have criticised Imperial Tobacco for not venturing into the HTP category.[15]

Perhaps bowing to market pressure, Mark Williamson, Imperial's chairman, announced in February 2018 that the company had "multiple [HTP] formats under development", and that it had trialled them in Europe and Japan.[16][17] 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]

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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. 4.0 4.1 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. 9.0 9.1 9.2 Imperial 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. Tobacco Reporter, Imperial shuns concept of heat-not-burn products, 7 May 2015, accessed February 2018
  11. 11.0 11.1 M. Geller, Imperial shuns 'heating products' pushed by Big Tobacco rivals, Reuters, 6 May 2015, accessed February 2018
  12. Reuters, FDA's tobacco stance faces test with Philip Morris iQOS device, 22 January 2018, accessed February 2018
  13. British American Tobacco, Developing less risky products, undated, accessed February 2018
  14. 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
  15. T. Boles, Imperial Brands is expected to reassure the market with new next generation products,, 5 November 2017, accessed February 2018
  16. Imperial Brands, AGM Update, 7 February 2018, accessed February 2018
  17. M. Williamson, Presentation at the Annual General Meeting 2018. 7 February 2018. Imperial Brands, Bristol