BRISTOL, England -- Imperial Tobacco Group Plc, the maker of Davidoff cigarettes, won approval to introduce its European brands in the United States, the industry's most profitable market.
The Bristol, England-based company said Wednesday that it joined the Master Settlement Agreement, the accord between cigarette makers that restricts advertising and is a prerequisite to selling tobacco in the United States. Imperial will start selling brands such as Davidoff in the U.S. within weeks, according to a Bloomberg News report.
Imperial this year became the first foreign competitor for Altria Group Inc. and Reynolds American Inc. in their home market in a decade. Imperial already sells cigarettes locally through Commonwealth Brands, which it bought in April for $1.9 billion, and will get the biggest U.S. cigar business when it completes its purchase of Spain's Altadis SA next year.
This is not as important as the progress of the Altadis deal, but it does confirm that progress is being made irrespective of deals, Bruce Davidson, an analyst at Blue Oar Plc in London, told Bloomberg. Until now, they haven't been able to do very much with Commonwealth.
Imperial is Europe's second-largest publicly traded cigarette maker. Commonwealth has 3.7% of the U.S. market with discount brands such as USA Gold and Sonoma.
The company also sees opportunities to expand U.S. operations that make fine-cut tobacco, which smokers use to roll their own cigarettes, Imperial spokesperson Alan Parsons told Bloomberg. Imperial has about 1% of the U.S. market for the product.
Formed in 1901 to stop American Tobacco from buying up British cigarette makers, Imperial entered the United States a century after promising to keep out of the country to end a price war. Imperial started selling its premium Davidoff brand in Mexico and Canada this year.
Imperial Tobacco, whose brands also include John Player Special and West, said in March that expansion in the U.S. would add $103 million to profit in the year through September 2009.
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