US Nielsen Combustibles: 4 Weeks to 11 July

Research evidence excerpt

US Nielsen Combustibles: 4 Weeks to 11 July

t brand has

Deep Discount gaining ground. Downtrading appears to have remained prevalent, whereby seen moderating share gains as Marlboro

losses have deepenedJapan Tobacco's Discount-centric portfolio saw volume growth. While Marlboro's volume Altria US Cigarettes & Cigars - Change in market

declines accelerated to -12.3% in July (vs June -11.2%), the Basic brand's growth has share by brand (bps)

moderated, resulting in share losses for Altria, while BAT saw slightly more moderate value 200bps150bps100bps

50bpsshare losses in July (-16bps vs prev -56bps, with Altria -51bps vs -15bps in June). We view the 0bps

-50bps

-100bpsdata as a +ve for BAT, Japan Tobacco and IMB and a slight -ve for MO. -150bps

Exposure to Nielsen dataset. Exposure to the United States as a % of group combustibles .Source: NielsenIQ, JefferiesMarlboro Virginia Slims Parliament Basic

volumes: British American Tobacco 9.3%, Imperial Brands 11.3%, Altria 100%, Japan Tobacco

c. 2.5% to 3%.

British American Tobacco (BUY). BAT is, in our view, at an early stage of a successful

transition towards a Smoke Free Products-centric portfolio, underpinned by the accelerating

growth of Velo Plus in US Oral Nicotine Pouches. See our F25 Results review here and our

Profitability Deep Dive here.

Imperial Brands (BUY). The Combustibles business has been resilient in key markets and,

despite a fortress balance sheet and rich cash returns, IMB is trading at a Tobacco-wide trough

cal27E PE of 7.3x that we think should improve. The business remains on a good footing in

the US, with slight market share gains into June. See our Initiation here and our F25 Results

Review here.

Japan Tobacco (HOLD). Global Flagship Brands appear in good health, having gained share in