Imperial in China JV

Subsidiaries of Imperial Brands and the China National Tobacco Corporation (CNTC) have established a joint venture company whose initial aims are to increase sales of Imperial’s brands in China and those of Chinese brands elsewhere.

Imperial said in a note posted on its website that Global Horizon Ventures Limited (GHVL), which it described as a ‘dynamic long-term’ joint venture (JV) business, would look to develop a ‘variety of growth opportunities in China and international markets’.

But initially it would be focused on:

* leveraging the expertise of China’s largest tobacco company, Yunnan Tobacco, to drive the sustainable growth of Imperial’s Growth Brands West and Davidoff in China; and

* maximising the potential of two Yunnan brands, Jadé and Horizon, in markets outside of China.

Jadé was said to be joining Imperial’s portfolio of Specialist Brands.

‘The partnership has the potential to deliver additional meaningful Growth Brand volumes in the JV’s first five years,’ Imperial said in its note.

‘Further tobacco and next generation product launches, as well as potential M&A [merger and acquisition] opportunities, will also be evaluated by GHVL in due course.’

Imperial Brands chief executive, Alison Cooper, and the chief commissioner of China’s State Tobacco Monopoly Association (STMA), Ling Cheng Xin, formally endorsed the JV during a signing ceremony in Beijing. Imperial’s note was dated January 11, but there was no mention of when the JV was established or when the signing ceremony took place.

“We’re excited by the growth potential offered by this new business opportunity and look forward to seeing our co-operation with our Chinese partners flourish for many years to come,” Cooper was quoted as saying.

GHVL, based in Hong Kong, has been jointly founded by ITL Pacific HK Limited, a subsidiary of Imperial Brands, and Yunnan Tobacco International Company Limited and Tian Li International Company Limited, both units of the CNTC, the operational arm of the STMA.

‘The JV builds on a track record of co-operation which began in 2003 between Imperial and Yunnan Tobacco, China’s number one tobacco company with a market share of over 20 percent,’ Imperial said in its note.

‘China is the largest tobacco market in the world with annual volumes of close to 2.5 trillion cigarettes.’

A footnote to the Imperial announcement said that Yunnan Tobacco International Company Limited was a subsidiary of Yunnan Tobacco Industrial Corporation, in turn a subsidiary of the CNTC; and that Tian Li International Company Limited was a subsidiary of China Tobacco International Inc, in turn a subsidiary of the CNTC.