UK and Italy Tobacco Sales Plummet, Imperial Brands and Japan Tobacco Capture Market Share in Europe

According to Nielsen data cited by Bank of America, cigarette and cigar sales in two core European markets saw a significant decline as of mid-May, with the UK down 14.3% and Italy down 5.9%. These figures indicate a continuous shrinkage in combustible tobacco overall, but the performance of different manufacturers varies significantly in these two markets, with Italy being a relative bright spot for some companies.

During this period, Imperial Brands saw a 13.8% decline in cigarette and cigar sales in the UK, which accounts for about 6% of its tobacco and new tobacco product revenue. However, in Italy, Imperial Brands' sales increased by 22.8%, with market share rising by approximately 150 basis points. Japan Tobacco also exhibited a similar trend, with a 13.9% decline in the UK but only a 5.5% drop in Italy, along with a 15 basis point increase in market share.

British American Tobacco (BAT) and Philip Morris International (PMI) did not perform as well in terms of market share. BAT's UK sales fell by 20.3%, resulting in a loss of about 50 basis points in market share, while its Italian sales dropped by 7.3%, losing approximately 30 basis points in share; Bank of America estimates that the combined markets of Italy and the UK account for about 3% of BAT's adjusted EBITDA (including new business categories) by 2025. Philip Morris International's UK sales decreased by 16.1%, and its Italian cigarette sales fell by 8.1%, losing about 20 basis points and 100 basis points in market share, respectively. However, the report notes that Nielsen's EU data did not include PMI's heated tobacco products in its statistics.