As the slowdown in consumer spending deepens, Imperial Tobacco and Gallaher are chasing the low end of the market with price cuts and cheaper brands.

The threat of price competition has also eased after large mergers such as Imperial Tobacco's purchase of Altadis and Japan Tobacco's acquisition of Gallaher.

The cigarette maker bought RJR Nabisco Inc. 's international businesses, including the Camel and Winston brands, in 1999 and the U. K. 's Gallaher Group in 2007.