STRATEGY

Our strategy is aligned to our purpose of creating something better for the world’s smokers and focuses on driving results in three key areas. In Tobacco we are maximising opportunities for our Growth Brands in priority markets. Through our growing portfolio of Next Generation Products we are providing adult smokers with a range of less harmful alternatives to cigarettes, with a particular focus on the vapour category.

The disciplined approach we take to managing cost and cash provides the funds to invest in growth. Our updated sustainability strategy supports our commercial and public health ambitions, and everything we do is underpinned by high standards of governance.

BUSINESS MODEL

We have also evolved our business model to more clearly explain how Tobacco Maximisation and Next Generation Products (NGP) create value. We have two distinct growth models, our Market Repeatable Model for tobacco and the 4Bs for NGP. Consistently applying these models to the right markets and the right brands is key for delivering quality growth. Our high operating margins drive the strong cash flows that are a hallmark of our business and although NGP may initially dilute these margins we expect to see profitability improve over time. We use the cash we generate to reinvest to support growth, pay down debt or return to shareholders through dividends.

4Bs FOR NEXT GENERATION PRODUCTS

1. BELIEVE

‘Believe’ is the first element of our 4Bs blu adoption model. This is about triggering connections and raising awareness of the brand amongst adult smokers through a variety of methods, including responsible marketing. The aim is to encourage smokers to understand that blu truly does offer something better than cigarettes.

2. BUY

Smokers who believe are inspired to buy. We take an ominichannel approach, with sales across traditional retail outlets, specialist vape stores and online. Online sales are age verified and we insist that our retail outlet and vape store partners only ever sell to adults.

3. BUY AGAIN

‘Buy again’ is about generating repeat purchase. A smoker who has had a positive initial experience with blu will have the confidence to buy again. It is the start of building brand loyalty and relies on a frictionless omnichannel experience, ensuring our products are always available when and where smokers want to buy them.

4.BELONG

We want smokers to stay with blu and not revert to smoking, so we welcome blu users to belong to a thriving community (blu.com). It is here that we deepen our connection with consumers and increase the level of interaction. This includes offering exclusive access to products and promotions and the chance to participate in our bluNation loyalty programme.

MARKET REPEATABLE MODEL FOR TOBACCO

SIMPLE MARKET FOCUSED PORTFOLIO

Our Market Repeatable Model starts with a simple market focused portfolio that is built around an optimal number of brands and stock keeping units that are aligned with consumer needs. Our strongest assets are our Growth and Specialist Brands and we focus on driving their performance to generate quality market share growth.