Grow-your-own hits key Imperial Tobacco market

Successful price hikes helped Imperial Tobacco to produce a strong rise in revenues in the final quarter of its financial year despite a drop in the volume of cigarettes and rolling tobacco it sold.

The company has already been struggling to cope with lower demand in southern Europe, as consumers have been hit by the eurozone crisis.

Now it faces a new challenge in Poland, which with Ukraine accounts for about 15 per cent of its volumes. A loophole in the country's laws allows farmers to grow tobacco and sell unprocessed leaves without tax to consumers who then dry and shred them to make handrolling tobacco.

In the Ukraine counterfeit cigarettes have soared in popularity, weakening demand.