Imperial Tobacco Group Preps for U.S. Entry

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Imperial Tobacco Group Preps for U.S. Entry

FAIRFIELD, N.J. -- Imperial Tobacco Group, manufacturer of West and Davidoff cigarettes, has filed an application with the state's Attorney General for participation in the Master Settlement Agreement.

Imperial has been exploring strategies to break into the U.S. market, but ruled out acquisitions to avoid association with potential lawsuits, chief executive Gareth Davis told Bloomberg News. Since the company forecast that the number of duty-paid cigarettes sold in its biggest market, the United Kingdom, will decrease 3 to 4 percent this fiscal year, it has begun to consider expanding into new markets.

"(The U.S.) is a highly attractive market with highly-attractive margins," Davis told Bloomberg News. U.S. smokers consume 7 percent of the world's cigarettes and account for 30 percent of the industry's profit, he noted. Problems in the states have become "significantly less" than recent years, he continued.

This reduction in problems could be the results of two of the biggest lawsuits in the American tobacco industry, Bloomberg News reported. Courts reversed a $10.1 billion damage suit against Philip Morris in December and the Florida Supreme Court reversed the $145 billion in damages against American cigarette makers in June.

"It all points to a more settled landscape in the United States," Davis said.

With Imperial's entrance, American tobacco will face the first major competitor in years, Bloomberg said. Currently, Imperial only sells Rizla rolling papers in the U.S.

According to Hoover's Handbook, Imperial Tobacco was founded in 1902 when a number of U.K. tobacco companies banded together against American tobacco's entry into their market. Eventually, Imperial and American tobacco agreed to stay out of each other's way. Imperial sells cigarettes, cigar, roll-your-own tobacco and snuff in more than 130 countries. Robert Burton Associates Ltd., the U.S. subsidiary of Imperial Tobacco, manufactures and distributes brands of rolling papers, cigarette tubes and tobacco accessories under the name E-Z Wider, Joker, Premier Supermastic, Rizla, El Rey, Club, Rayo, Escort and Canuma.