Consumer health consciousness impacts cigarettes
The government’s ongoing healthy living and anti-smoking campaigns raised consumers’ health consciousness in 2012. This adversely affected the largest tobacco category, cigarettes, which registered an overall decline in retail volume sales. A shift from high tar to lower tar cigarettes was also increasingly apparent during 2012, with high tar cigarettes seeing retail volume decrease while low and ultra low tar cigarettes posted increases.
Illicit cigarette volume sales decline in 2012
Taxation remained constant in 2012, with the government deciding not to raise cigarette taxes. The latest increase was in 2010. Illicit cigarette volume sales fell in 2012; British American Tobacco (Malaysia) Berhad reported that illicit cigarettes accounted for around one third of total volume sales. However, the illicit trade remains a concern for manufacturers, as the company’s research means that 3-out-of-10 packs sold are illegal products. At the end of 2012, the Malaysian government proposed to fine consumers who were found in possession of illicit cigarettes. However, the public and key industry players did not welcome this move as it was difficult to implement the measure, while legal and illicit cigarettes have the same packaging in Malaysia.
Manufacturers seek ways to renew consumers’ interest
Following the success of Marlboro Ice Blast in 2011, manufacturers introduced numerous innovations for menthol capsule filters in 2012. The leading player, British American Tobacco (Malaysia) Berhad, revised and relaunched Dunhill Switch in 2012. This helped the brand to significantly increase its retail volume share. Pall Mall Mint (BAT) and Mild Seven Mint (JT Tobacco International Tobacco (M) Sdn Bhd), which featured menthol capsule filters, were also launched in 2012. Recognising the increasing image consciousness of consumers, Philip Morris (Malaysia) Sdn Bhd released the innovative Marlboro Advance, which emits less smoke due to possibly the world’s first recessed filter. Another move to sustain competitiveness concerned the relaunch of packaging, which was carried out by Pall Mall and Mild Seven.
Slight shifts in distribution are visible
Hotels/restaurants/bars continued to account for the highest retail volume share in cigarettes, while tobacco specialists dominated cigars and smoking tobacco in 2012. Nonetheless, shifts in distribution were observed. The heightened consumer demand for convenience was the key driver of such shifts. For instance, convenience stores registered a gradual increase in retail volume share in cigarettes and smoking tobacco, due to a comprehensive range and 24-hour opening, 7-days a week. This allowed consumers to shop at their convenience. On the other hand, a reliance on professional advice, coupled with a comprehensive range, saw tobacco specialists remain dominant in cigars, in particular.
Tobacco expects some improvement in the forecast period
Over the forecast period, tobacco as a whole is expected to show some improvement. However, hikes in retail volume sales are unlikely, given the government’s anti-smoking push. With the government proposing new anti-smoking measures at the end of 2012, more smokers are likely to quit the habit; especially as health consciousness has heightened since the end of the review period. The implementation of any tax increase in the forecast period will also adversely impact the performance of tobacco, particularly cigarettes. Some consumers will be encouraged to shift back to illicit cigarettes, which represent a cheaper alternative to legal cigarettes. The trade-up from RYO tobacco to cigarettes for reasons of convenience is also likely to be more pronounced as consumers’ disposable incomes are expected to improve.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Malaysia 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 Malaysia, 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 Malaysia for free:
The Tobacco in Malaysia 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 Malaysia?
- What are the major brands in Malaysia?
- Which sector of the tobacco products market is the largest by value sales in Malaysia?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in Malaysia?
- Which sector is the most heavily taxed in Malaysia?
- Which companies dominate in the total tobacco market in Malaysia in terms of market share?
- What is the distribution channel split for the tobacco products market in Malaysia?
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- Gain competitive intelligence about market leaders
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This industry report originates from Passport, our Tobacco market research database.