SEPTEMBER 5, 2003
The effect of tobacco bans
British tobacco giant Gallaher Group, which sponsors Jordan Grand Prix with its Benson & Hedges brands, is reporting a profit of $382m in the first sixth months of the year, a seven percent increase over 2002. Gallahers reckons that it is on the way to a 10% increase by the end of the year but says that there are some areas where the company can do better. There has, for example, been a 12% slump in its sales in Ireland because of the Irish government's decision to dramatically raise the taxes on tobacco in their 2003 budget. Things have not been helped by the fact that smoking will soon be banned in Irish pubs and offices which is expected to further reduce sales.
There have also been dips in profits in the UK where a similar ban is due to come into force and in the states formed from the old Soviet Union where profits were down 26% due to the weakness of the dollar, higher taxes and increased marketing costs.
The company recently signed a joint licence deal with Shanghai Tobacco for the Chinese and Russian markets, which it hopes will provide new opportunities for growth.
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