Imperial Brands Plc—the parent company of Tabacalera USA, Altadis U.S.A. and JR Cigar, as well as 50 percent stakeholders in the Cuban company Habanos S.A.—and China National Tobacco Corporation have announced a new joint venture that will allow Imperial to enter the Chinese market.
It’s unclear if the move will have any effect on premium cigars, but it could have major implications down the road.
Cigars make up a tiny part of Imperial’s $46 billion market capitalization and the new joint venture is likely to focus on cigarettes and e-cigarettes in China, the largest cigarette market in the world. However, due to public statements by both Imperial Brands and Japan Tobacco International (JTI), many investing experts believe that a JTI purchase of Imperial Brands is likely.
The announcement of the joint venture was already being described by analysts as a positive move to that takeover.
Infifon Hong Kong is the current distributor for Cuban cigars in mainland China. Imperial Brands has a stake a 25 percent stake in The Pacific Cigar Company, which distributes cigars in most of the rest of Asia including Hong Kong and Macau.
The company has similar holdings in other Cuban distributors 5th Avenue Products Trading GmbH (Germany), Hunters & Frankau (the United Kingdom), Havana House Limited (Canada), Intertabak AG (Switzerland), Maori Tabacs S.A. (Andorra) and Phoenica TAA Cyrpus Ltd (Middle East/Africa).