Cigarette giant Imperial Brands PLC said it was in talks about transferring its assets and operations in Russia, becoming the latest tobacco company to signal its intention to exit the country.
Imperial, which makes the JPS and Gauloises brands, said Tuesday it had begun negotiations with a local third party about handing over its 1,000 sales and marketing staff in Russia as well as its factory in Volgograd.
A spokesman declined to comment on whether Imperial would retain its trademarks like West in Russia since negotiations are still ongoing. Imperial’s announcement comes after rival British American Tobacco PLC on Friday said it too would shift assets to a local company and exit Russia entirely.
Other global tobacco giants have so far retained their operations in Russia. Philip Morris International Inc. has said it will suspend planned investments in Russia and scale down manufacturing operations, while Japan Tobacco Inc. has said it would suspend investment and marketing activities, including a planned new product launch.
Tobacco makers were among the first big Western brands to descend on Russia in the early 1990s as the country transitioned from communism to capitalism.
BAT, Philip Morris Cos. and R.J. Reynolds Tobacco International SA–now owned by BAT–were among the earliest to push in, snatching market share from domestic producers helped by pricey advertising campaigns.
On weekends, “Lucky Strike girls” roamed Moscow’s bars, offering patrons a smoke and a light.
“American cigarettes were once so rare here, they were better than cash,” The Wall Street Journal wrote in 1995. “Now, Western smokes are easier to buy than a carton of milk.”
Russia and Ukraine together made up about 2% of Imperial’s revenue and 0.5% of profit last year. Imperial said the financial impact from exiting Russia and the disruptions in Ukraine would reduce its full-year constant currency net revenue growth guidance to between roughly flat to 1%, down from previous guidance of about 1.4%.