Imperial Tobacco says Isis to blame for falling cigarette sales

While smokers will bear the cost of Labour’s cigarette levy

Picture of cigarettes taken on September 25, 2014 in Paris. France unveiled on September 25 a raft of new measures to crackdown on tobacco and electronic cigarettes including the introduction of plain cigarette packaging and the ban on electronic cigarett (JOEL SAGET/AFP/Getty Images)

Political chaos under Isis in Iraq is having an unexpected impact on sales of tobacco, according to half-year results released by Imperial Tobacco.

The Bristol-based maker of Gauloises cigarettes, Golden Virginia tobacco and Rizla cigarette paper has said volumes of sales are down 5 per cent in the last half year, with 2 per cent of that decline due to "the deteriorating political and security situation" in Iraq, an Isis stronghold.

Imperial saw overall global cigarette volumes decline 5% in the first half of the year to the end of March, but the company’s most profitable brands – which include Davidoff and Gauloises Blondes – sold 12% more. Underlying profits, stripping out currency movements, increased by 5% to £1,295 million.

Imperial Tobacco also warned that a new levy on cigarette makers will be passed straight on to customers, if Labour wins Thursday’s General Election.

Ed Miliband has pledged to hit tobacco companies with a windfall levy (AFP)

Ed Miliband has pledged to hit tobacco companies with a windfall levy to pay for a guaranteed cancer test within seven days for every NHS patient.

Alison Cooper, chief executive of Imperial Tobacco, said: “We know little about it, but this looks like a quasi increase in excise so we would have to pass it on. We already have concerns about the high levels of excise in the UK, this will unfortunately increase those further.”

Tobacco companies argue that high levels of taxation in the UK are forcing people to buy blackmarket cigarettes, smuggled in by criminal gangs. They are also preparing a legal challenge to the Coalition Government’s plans to introduce plain packaging for cigarette brands.