Clove cigarettes continue to drive tobacco
New regulations pressing the tobacco industry are not stopping growth. 2013’s positive growth shows that price increases and bans from the new ruling have had a soft impact on consumption. Whilst cigarettes dominate tobacco, cigars have also shown an increased consumer base over the years. Local manufacturers have the advantage of controlling average unit prices and serving consumers’ preferred product, the clove-blended cigarette, which is the most widely smoked cigarette in the country.
“Lighter” high tar cigarettes’ robust sales growth continues
Amid the new ruling of tobacco finalised at the end of 2012, and an increase in excise tax causing average prices to go up, cigarettes consistently show positive volume and value growth. There is strong growth of ‘lighter’ high tar cigarettes. HM Sampoerna Tbk PT’s ‘mild’ cigarettes, such as Vegas Mild, Trend Mild and U Mild, continue to perform well with double-digit growth. These economy products serve a wide consumer base, supporting growth of the cigarette category. A Mild, which is the company’s leading brand of ‘lighter’ high tar cigarettes, is considered a premium brand and tops volume sales in 2013.
Black packaging in trend for premiumisation
The trend of black packaging continues as more new cigarette products are using sleek black packaging. Well-known products with black packaging include Djarum Black from Djarum PT, Dji Sam Soe Magnum from HM Sampoerna Tbk PT and some of the newly-launched products such as Gudang Garam Signature from Gudang Garam Tbk PT. Besides standing out on store shelves, the colour black gives the products a more expensive look. It is common to see black packaging combined with other colours such as gold and red for a strong and elegant image. With regulations on restrictions of the use of “light” or “mild”, manufacturers are pressed to find other ways to give identification to their products. Lower tar cigarettes use lighter coloured packaging, and green is usually used for menthol cigarettes.
Strict regulations of product promotion
The new regulation PP No.109/2012 on tobacco (finalised in December 2012) is slowly being implemented. Tobacco manufacturers still have time to adapt and make changes based on this new regulation. The government ruling of tobacco in Indonesia includes a restriction and new procedures on how to market, advertise and promote all tobacco products. Advertisements have become limited as prints, television ads, and other forms of advertising are now controlled in terms of size and placement. Free samples, gifts or discounts are prohibited as is the use of tobacco brands or logos with other products or events. Another regulation is the addition of an image and health warnings to cover 40% of the packaging. Manufacturers have until June 2014 to make the required changes.
Elections and world cup to boost sales
Having experienced rising consumption during the election year, and the addition of the world cup being held in the same year as Indonesia’s Presidential election in 2014, major tobacco manufacturers are preparing themselves by increasing production. HM Sampoerna Tbk PT has built new factories, while competitors Gudang Garam Tbk PT and Djarum PT have added manufacturing facilities in order to up production for the rising demand.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Indonesia with research from Euromonitor's team of in-country analysts.
Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.
If you're in the Tobacco industry in Indonesia, our research will save you time and money while empowering you to make informed, profitable decisions.
When you purchase this report, you also get the data and the content from these category reports in Indonesia for free:
The Tobacco in Indonesia market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Production, imports by origin, exports by destination
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Tobacco in Indonesia?
- What are the major brands in Indonesia?
- Which sector of the tobacco products market is the largest by value sales in Indonesia?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in Indonesia?
- Which sector is the most heavily taxed in Indonesia?
- Which companies dominate in the total tobacco market in Indonesia in terms of market share?
- What is the distribution channel split for the tobacco products market in Indonesia?
Why buy this report?
- Gain competitive intelligence about market leaders
- Track key industry trends, opportunities and threats
- Inform your marketing, brand, strategy and market development, sales and supply functions
This industry report originates from Passport, our Tobacco market research database.