A Challenger Mindset

We are designing global processes and digital strategies.

Simplified and efficient operations

Imperial emerged as the world’s number four tobacco business through bold acquisitions over the past two decades. These transactions have given the Company significant positions in some of the world’s most attractive markets and a stable of strong brands. Our new strategy identified a need to go further in integrating this portfolio of businesses to create simpler, more efficient operations, enabling us to better capture future opportunities.

Two years on, our transformation is well underway with significant structural changes, the introduction of new capabilities, and investment in digital.

We’ve identified a clear role for each of our diverse markets.

Driving value from our broader market portfolio

While our main combustible focus is on our five priority markets, we have a clear view on how we can drive value from the breadth of our full market portfolio. Our smaller markets typically have attractive margins and are potential platforms for future growth. And they are markets which are used to operating successfully with more limited resources and leveraging our global capabilities in manufacturing, distribution and brand building.

Our strategy launched in January 2021 proposed a more rigorous approach to getting the most from this diverse set of markets.

Through a consumer-focused approach we aim to make a meaningful contribution to harm reduction.

Building a targeted ngp business

As part of our strategy launched in January 2021 we overhauled our approach to NGP. The plan we are now rolling out plays to our strengths; it recognises our position as the smallest of the four global tobacco players, and is based on three clear principles:

• Consumer led: We start by understanding consumers and their needs. This informs our choice of markets, choice of NGP category for each market, and how we differentiate our propositions
• Focused: Our role is not to provide a full offering in all markets. Instead we prioritise markets where there is an established category presence and where we have an existing route to market through our tobacco business.
• Collaborative: Our in-house team works in close partnership with third-party innovation houses to harness their expertise and combine this with our knowledge and our insights from adult consumers.

We’re investing to support a rigorous approach to consumer insight.

Putting the consumer at the centre of the business

Placing the consumer at the centre of the business means investing in capabilities, data and insights to ensure the voice of the consumer shapes and influences our decision making and becomes part of the fabric of our culture. Chief Consumer Officer Andy Dasgupta was appointed in April 2021 to bring the voice of the consumer consistently to the Executive Leadership Team and to the broader business.

Andy and the connected multidisciplinary team he has built have focused on four priorities in the past year:

• To embed consumer centricity into the organisation;
• To rebuild consumer-preferred brands to stem the share losses across the priority combustible markets;
• To undertake market trials to validate our approach to NGP;
• To build our innovation capabilities by leveraging third-party partnerships.

We’re growing market share across our top five markets.

Focusing on priority combustible markets

Five markets – the US, Germany, UK, Spain and Australia – make up around 70% of our operating profit. In each of these markets, Imperial enjoys a top-three market share position, with established brands and strong customer relationships. At the heart of our new strategy was a recognition that for Imperial to become a business capable of sustainable growth, long-term share declines in these markets needed to be reversed.

Our strategy defined six operational levers to improve combustible performance and, two years on, we have made significant progress on each front.

Our success in these six areas has led to growth in aggregate market share for these five priority markets of 35bps over the past year – while at the same time we have maintained strong pricing discipline.

We’re embedding a performance-based culture across the business.

Transforming our culture

Our new strategy launched in January 2021 identified the development of a performance-based culture and capabilities as a key enabler to successfully delivering our strategy. This reflects the importance of harnessing the skills, the performance, and the potential of every colleague in pursuit of our strategic goals.

In October 2021, following extensive consultation with colleagues across all markets and functions, we launched ‘Connections’, our new purpose, vision and behaviours, to all 26,000 of our employees through our first global conference.

Our five behaviours are:

• Start with the Consumer;
• Collaborate with Purpose;
• Take Accountability with Confidence;
• Be Authentic and Inclusive to all; and
• Build our Future.