Money rolls in for Imperial Tobacco despite cheaper cigarettes challenge

Smokers have reacted to rising unemployment by trading down to roll-your-own cigarettes.

Imperial Tobacco said today that rising prices, largely due to tax rises, were forcing customers to give up high-end brands in favour of cheaper fine-cut tobacco.

Gareth Davis, the outgoing chief executive of Imps, said: "Cigarettes have risen in price quite dramatically over the last few years, because of the need to raise taxes.

"We've seen this emergence of a fine-cut market and it's now extremely vibrant...we see it as a further avenue of downtrading."

Imps beat City profit forecasts with a 16% rise in half-year earnings and looked towards a better second half as recovery kicks in. Profit rose 4% to £1.18 billion.

Imps is the world's fourth-biggest cigarette maker with brands including Lambert & Butler, West and Gauloises.

Davis hands over to chief operating officer Alison Cooper next month.