Gallaher Group, the maker of Benson & Hedges and Silk Cut cigarettes, said Irish sales rose 1.8 per cent in volume terms last year and that it raised prices this week to help accelerate revenue growth.
The volume increase, exactly in line with growth for the entire Irish market, was due to the retail and hospitality trade increasing their cigarette stock to pre-smoking ban levels, the company said. Gallaher raised the price of Benson & Hedges by 10 cent to €6.45 on February 27th.
Gallaher's cigarette volumes dropped about 8 per cent in the nine months following the introduction in March 2004 of a ban on smoking in pubs and restaurants, according to Claire Jenkins, the director of investor relations at the British tobacco company.
"You can assume that the retail trade and hospitality trade didn't know what was going to happen after the ban so there was an element of de-stocking," Ms Jenkins said. "Consumption didn't decline as much as thought so they then restocked back to normal levels."
Gallaher maintained its lead of the Irish cigarette market in 2005, with a share of 49 per cent. Benson & Hedges Gold grew market share to 20.4 per cent last year from 19.8 per cent in 2004.
However, Gallaher cut 90 jobs at its Ballymena plant last year and shut its plant in Tallaght in 2003 as Irish smokers either ditched the habit or low-cost flights enabled them to travel more frequently to buy cheaper cigarettes abroad.
The prevalence of smoking among the Irish population had declined to 23.9 per cent last October from 31 per cent in 1998, research from the Office of Tobacco Control shows. Official figures from the Central Statistics Office suggest that tobacco sales fell 13 per cent in 2004. Gallaher and its rivals are expanding to eastern European markets as western Europeans become more health conscious and governments outlaw smoking in the workplace.
The company said yesterday, on National No-Smoking Day, that while 2005 profits climbed 6.6 per cent, it will have slower profit growth in Europe this year because of "challenging" trading conditions. It posted underlying pretax profits of £570 million (€837 million), in line with analyst forecasts of £561-£571 million.
Gallaher also said there are eight claims against it in Ireland from people claiming to have suffered from ailments resulting from smoking.
