Title: General manager, Imperial Tobacco Czech Republic

Residents of the Czech Republic remain generally resistant to such a ban, which must be welcome news of Imperial Tobacco, one of the major tobacco companies operating in the country.

Bavaria and Saxony — will have banned smoking in public places, joining a list of European countries that have similar bans, including France, Ireland and Italy. Despite growing public support, residents of the Czech Republic remain generally resistant to such a ban, which must be welcome news to Dominic Brisby of Imperial Tobacco, one of the major tobacco companies operating in the country. ? Does Imperial oppose the smoking bans we’ve seen spread across Europe in the past few years? We think outright bans are disproportionate and unnecessary. We understand that some people find cigarette smoke annoying, but if consumers really wanted pubs and restaurants to ban smoking then the market would take care of this by itself. In a free society it does not seem unreasonable to be allowed to sit down at the end of a day’s work with a beer and a cigarette. ? A survey last year found that residents of the Czech Republic, More than any other EU country, were resistant to the notion of restricting smoking in pubs and clubs. Why do you think that is? I think Czech people place great value on personal liberty and freedom of choice. Perhaps Czech people, having lived under a communist system, are also less willing to allow politicians to micromanage every aspect of their lives. ? Taxes are behind the expected rise in cigarette prices this year, correct? There was a need to increase taxes on Cigarettes to be in line with EU requirements, although the government decided to take this further, to try and raise revenues. Cigarettes will rise probably 8 Kc [45 U.S. cents] per pack in either March or April. We can live with the increase in cigarette taxes, but the increase on loose tobacco will put the taxes at an extremely high level and could encourage a surge in smuggling. Previously, we have Reduced our margins, although not to deal with tax increases per se, but rather to respond to aggressive pricing from some of our competitors. My expectation is that this time we will pass on the full tax increase to consumers. ? Do these taxes dissuade people from smoking or cause them to move to cheaper brands? Most smokers have chosen to continue to smoke. The market in the Czech Republic is broadly stable at about 24 billion Cigarettes per year. Smokers have moved to cheaper brands, like Imperial Tobacco’s Moon, over the past couple of years. This is natural as the absolute price of Cigarettes increases. Many consumers have also chosen to save money by making their own Cigarettes, using loose tobacco like our brand Paramount, which has over 40 percent market share in this category. ? Beginning in the United States, we’ve seen the concept of smoking move from a question of choice and taste to a moral issue, perhaps coinciding with reports on the health effects of secondhand smoke. Why this change in perception? I think freedom of choice is a moral issue, and is an issue worth fighting for. At the same time, it’s true that some of the anti-smoking extremists have been very successful in setting the public agenda, and in trying to create greater legitimacy for their attacks on smokers. The interesting thing now is that there are indications that the public perception may be going full circle. One analogy could be the prohibition era in the United States — certainly many people disliked the social consequences of alcohol consumption, but society learned that disproportionate policies against a popular consumer product can be counterproductive. ? What steps do you take to prevent underage smoking? We are absolutely opposed to underage smoking and in many markets across the world we fund youth smoking prevention programs. We only market our products to adult smokers and abide by a stringent international marketing code to ensure consistency across the group. We also encourage governments to have legal minimum-age requirements for the purchase of tobacco products. ? Philip Morris is the dominant cigarette company on the market. What strategies do you use to take them on? There is no real secret to our strategy, which is to offer outstanding quality and value to adult smokers, in every price segment of the market. This has led to unprecedented growth of our brands like Davidoff and Moon, as well as in loose tobacco. We’re also pleased that our brand portfolio will be strengthened following our 12 billion euro [$17.5 billion/313 billion Kc] acquisition of Altadis, which will give us iconic brands like Gauloises. In the Czech Republic, we pride ourselves on our ability to respond quickly to events — whether consumer demands or competitors’ actions — as well as our perfect execution in the market. As a result of all this, Imperial Tobacco is the fastest-growing tobacco company in the country.


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