Imperial Tobacco share price up after falling yesterday on UK’s U-turn on plain packaging

on Nov 29, 2013
Updated: Oct 21, 2019
Listen, Friday, November 29: Shares in Imperial Tobacco (LON:IMT) and British American Tobacco (LON:BATS) have recovered slightly today following yesterday’s sharp fall prompted by the UK government’s intention to revisit plans to introduce plain packaging for cigarettes.

Imperial Tobacco and British American Tobacco yesterday saw a combined £860 million wiped off their stock market value after the government performed a U-turn, having earlier rejected calls for plain cigarette packaging.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Shortly after 13:00 UTC today Imperial Tobacco’s share price was up 0.30 percent, while BAT’s share price was 0.40 percent higher

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The British government yesterday said that it would look again at the case for introducing standardised packaging for tobacco products and make a decision next year following a fresh review of the issue. Public Health Minister Jane Ellison announced that Sir Cyril Chantler, a prominent paediatrician who was knighted for services to medicine, has been asked to quickly carry out a review of the evidence, which will be completed by March. At the same time, changes will be made to the Children and Families Bill currently going through Parliament to ensure that a ban on branded cigarette packaging can be imposed “without delay” if the review concludes this is the right course of action.

The announcement came just four months after the government said it was shelving plans to impose plain packaging for tobacco products because it wanted to see the impact of the measure elsewhere. That decision was preceded by a wide public consultation last year, which found a small majority favoured plain packaging. Tobacco companies have long said that a ban on branded packaging will have no impact on legal smoking levels and would simply lead to an increase in smuggling and use of counterfeit products. Britain’s tobacco market is worth about $28 billion (£17.2 billion) a year at retail prices, according to data from Euromonitor International.

Analysts at Berenberg said that the government’s move was “negative for the sector” but singled out Imperial Tobacco and Japan Tobacco (TYO:2914) as the most vulnerable because the two companies have the biggest exposure to the UK. Imperial Tobacco has a 44 percent share of the UK cigarette market. “If the UK does pass PP [plain packaging] legislation, we believe it will be sued under EU property protection statutes and UK law,” the broker said.

If Britain introduces plain packaging for cigarettes, it would become one of the first countries in Europe to remove branding. Australia is the only country in the world to have introduced such legislation, while Ireland has said it also plans to ban branding on packets. A study conducted in Australia has found that smokers using standardised plain brown packets were 81 percent more likely to consider quitting, the BBC said.
**As of 13:25 UTC buy Imperial Tobacco shares at 2,325p**
**As of 13:25 UTC sell Imperial Tobacco shares at 2,323p**
**As of 13:24 UTC buy BAT shares at 3,263p**
**As of 13:24 UTC sell BAT shares at 3,262p**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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