A brief history of Imperial Tobacco

Imperial Tobacco dominated the British tobacco trade throughout much of the twentieth century.

Background and formation
Wills of Bristol employed about 1,000 workers by 1889. The business was best known for the Woodbine brand. Informed by their Congregationalist principles, the Wills family had, by 1895, introduced financing for a staff canteen, a convalescent home, a sanatorium, a resident nurse and doctor, paid holidays and a number of recreational clubs.

Imperial Tobacco was formed in 1901 by the merger of thirteen leading British tobacco companies. Wills controlled the combine with just over half of the equity, followed by Lambert & Butler of London, Mitchell of Glasgow and John Player of Nottingham.

It was a defensive merger following the acquisition of Ogden of Liverpool, one of Britain’s leading cigarette manufacturers, by the highly capitalised American Tobacco Company.

The businesses in the combine retained their own brands and salesmen, but pricing and accounting were organised centrally.

Salmon & Gluckstein, a retail tobacconist with 184 branches, was acquired for over £1.25 million in 1902, largely to prevent its acquisition by American Tobacco.

American Tobacco sold Ogden to Imperial in 1902, and both companies agreed to avoid its rivals’ domestic market. The global market was to be catered for by a new company called British American Tobacco, with a two third stake held by American Tobacco and one third held by Imperial.

Domination of the British tobacco market
Imperial Tobacco estimated it had “rather over 50 percent” of the British tobacco market by 1904. Woodbine was the highest-selling cigarette brand in the world.

Imperial Tobacco employed over 10,000 people by 1909, and three quarters of the workforce were female.

Imperial Tobacco held 87.5 percent of the British tobacco market in 1913. This share had declined to 72.5 percent by 1920, but included 91 percent of all cigarette sales.

Imperial Tobacco was the largest British public company by 1926.

Imperial Tobacco had seen its virtual monopoly on cigarettes corroded by the re-emergence of competitors such as Carreras, Gallaher and Godfrey Phillips by the late 1920s.

Imperial Tobacco employed 40,000 people across 27 factories by 1933.

Imperial Tobacco was the second largest industrial company in the world by 1937, outranked in market capitalisation by only General Motors.

John Player overtook Wills to become the largest single Imperial Tobacco subsidiary in the 1940s.

Imperial Tobacco held 78.8 percent of the British tobacco market in 1955.

Imperial Tobacco was the third largest company in the world outside the United States as measured by sales in 1957.

Wills Embassy was introduced as a filter cigarette from 1962. It was an overnight sensation, and was the highest-selling filtered cigarette in Britain by 1963. Embassy was the overall leading cigarette in Britain by 1965.

Imperial held 66 percent of the British tobacco market in 1968, followed by Gallaher (Benson & Hedges) with 29 percent. Carreras (Rothmans, Dunhill) was third in the market with a seven percent share.

Relative decline of the business
Imperial Tobacco diversified away from tobacco from the 1960s and changed its name to Imperial Group in 1973.

Imperial Group’s share of the British cigarette market had declined to just 37 percent by 1986.

Hanson Trust acquired Imperial Group for £2.7 billion in 1986.

Hanson Trust sold off non-core assets, such as the Courage brewing business to Elders for £1.4 billion, the hotel and restaurant business to Trusthouse Forte for £190 million, and the Golden Wonder crisps business to Dalgety for £87 million. The Ross Youngs frozen seafood business was sold to United Biscuits for £335 million. The sauces business, including Lea & Perrins and HP, was sold to BSN for £199 million.

The core tobacco business was reorganised. The range of products was reduced from 44 to 11, with a focus on five core brands. Five factories were reduced to three, with 1,000 redundancies.

Imperial Tobacco was demerged from Hanson Trust in 1996.

 

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