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Early History

Founded in Londonderry, Northern Ireland in 1857 by Tom Gallaher to manufacture and distribute pipe tobacco, success was fast for Gallaher Group. Business expanded rapidly, and by 1863 Gallaher was forced to move to larger premises in Belfast to process the demand for its products.

Tom Gallaher took a pro-active role in insuring that the business's products where of the highest quality. Beginning in the late 1870s, Gallaher began to supervise the purchase of tobacco in the United States personally.

Gallaher Group's growth was assisted by the firm's ability to pick trends. In the United Kingdom pipe smoking had been the dominant form of tobacco use, with its usage gradually dropping at the start of the nineteenth century. This changed with the return of British soldiers after the Crimean War. These soldiers returned to their homeland with the Turksih form - cigarettes.

Gallaher was quick to pick up the significance of this convenient form factor, developing a line of Gallaher cigarettes to market along side their pipe tobacco before brand choices and market share had risen. This smart decision benefited Gallaher with substantial market share in this new product, and fueled substantial growth.

To handle this increased business, the company opened a factory in London and once again moved its operations in Belfast in 1869. This larger factory, at the time, was the largest tobacco factory in the world.

A variety of social and technological changes benefit the company in the late nineteenth and early twentieth centuries. Technology became available to replace the inefficient have rolling of cigarettes with machines vastly increasing the amount of cigarettes able to be made per day.

This increase in production soon became critical for two vital reasons. Early in the Twentieth Century it became acceptable for women to smoke, and sales rapidly increased, helped by the manufacture of cigarettes designed to appeal to women. The second influence on sales was World War I, where cigarettes became essential for the welfare and morale of forces abroad.

Gallaher's significance in the United Kingdom was demonstrated in 1900 when it was awarded a Royal Warrant from Queen Victoria. Tom Gallaher died in 1927 at the age of 87, fortunately his business continued to thrive.

As with all tobacco companies, Gallaher Group benefited from the increased anxieties caused by World War II with an substantial increase in demand for their products. However, in 1941 their factory in Belfast was bombed twice, putting a strain on the steady supply of cigarettes for the war.

The company's growth continued after the war, unhindered by the wide spread growth of the risks of smoking. During this period Gallaher acquired the Benson + Hedges brand in 1955 and the brand Silk Cut was introduced to the market in 1963.

Post Merger

Gallaher Group was acquired by American Tobacco Company in 1968. Using the funds of its new parent, Gallaher went into a diversification drive in the 1970s extending into the 1990s, quickly buying into such varied businesses as optical lenses, confectionary, vending machines and retail stores.

While this was happening, the tobacco business went from strength to strength. Despite a weakening market in Britain, sales continued to increase with the company having three leading brands - Benson & Hedges, Silk Cut and Berkeley Superkings. Gallaher also was the leader in the pipe tobacco and cigar market in the UK.

As with all tobacco companies, Gallaher struggled under a series of laws restricting their right to advertise their product. Over time, Gallaher brands advertising became increasing subtle and abstract, highlighted with the campaigns of Benson & Hedges and Silk Cut.

In an effort to compete with the increasingly large amount of budget cigarettes on the market, Gallaher released the Mayfair brand in 1992 which has seen substantial success in the UK, becoming the second largest king-size cigarette brand. To counter the rapidly increasing cigarette taxes in the UK, the company also released Amber Leaf rolling tobacco in 1991.

American Brands (American Tobacco Company was renamed in 1969) decided to spin of Gallaher in 1997 in order to focus on its liquor businesses. To reflect this change, the company was once again renamed, this time to Fortune Brands.

Gallaher continued to be successful in the complicated tobacco market, and in 1997 released another budget brand Sovereign in 1997 to continue its growth in market share. The business acquired Moscow based Liggett-Ducat in 2000, controlling 17% of the Russian market. In 2001, the company acquired Austrian Tabak and immediately captured 90% of the Austrian tobacco market.

As of 2007, the business once again has become the target of a parent company, with Japan Tobacco announcing its intention to purchase the business. In March of this year, the investors of Gallaher approved the move.

Gallaher Group is now the fifth largest international tobacco company.

Major Brands

Cigarettes

Rolling Tobacco

Cigars & Pipe

References

http://www.gallaher-group.com/

http://en.wikipedia.org/wiki/Gallaher_Group

http://www.lse.co.uk/SharePrice.asp?shareprice=GLH&sharename=gallaher_group

http://www.fundinguniverse.com/company-histories/Gallaher-Group-Plc-Company-History.html

http://tinyurl.com/36ajms

http://www.euroinvestor.co.uk/Stock/ShowStockInfo.Aspx?StockId=1336

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