Cigarette smoking continues to decline
Volume sales of cigarettes declined again in 2014. This was the fifth consecutive year of poor performance for the category following the introduction of the smoking ban in public places in 2010. In addition, high cigarette prices, anti-smoking campaigns run by the government, the medical establishment and lobby groups all contributed to the fall in consumption. Within tobacco products, demand shifted to cigarillos and RYO tobacco, as a result of the popularity they enjoyed among Swiss youth. Cigars excluding cigarillos and pipe tobacco also registered declines in volume sales due to low consumer demand. These products suffered from an old fashioned image and appealed only to mature and traditional consumers. Vapour devices registered three digit value growth in 2014.These products grew rapidly over the review period, albeit from a small base. Growth was mainly due to cigarette smokers turning to vapour devices as a result of the smoking ban in public places.
Effective marketing strategies are crucial
The ban on sponsorship and advertising of tobacco products left point of sale as the only avenue through which producers were able to advertise. Thus, packaging became an important marketing tool for the leading manufacturers. Many used colour in order to help the product stand out behind the counter and attract attention and also to allow consumers to identify brands quickly and easily. The leading producers also focused on their flagship brands and introduced economy lines under these brands in order to target price-sensitive smokers.
High levels of consolidation among manufacturers
There was a high level of consolidation in the competitive landscape in tobacco products in 2014. The Swiss subsidiaries of the three multinationals, Philip Morris, British American Tobacco and Japan Tobacco International dominated cigarettes with only a small share in the hands of the private label ranges of retailers. In cigars, two manufacturers jointly held the bulk of volume sales. The presence of multinationals was invaluable for tobacco products as a whole, due to their financial power, which enabled them to make crucial capital investments, product innovations and regular product launches. This was of great importance, due to an increasingly hostile market environment for tobacco products.
Mainstream retailers strong in distribution
Modern grocery retailers characterised distribution of cigarettes in Switzerland, due to the large product range these outlets carried and the convenience factor. Within this, supermarkets, discounters and forecourt retailers registered the lowest declines in volume sales in 2014. In cigars, newsagent-tobacconists/kiosks led. In particular tobacconists were popular due to the expert advice these outlets offer consumers as part of the service, which corresponds with the up-market image of cigars. Internet retailing accounted for only a small share in the distribution of tobacco products in Switzerland at the end of the review period.
Cigarettes is expected to decline over the forecast period
Volume and value sales of cigarettes at constant 2014 prices are expected to decline over the forecast period, due to high taxes, the smoking ban in consumer foodservice outlets and continued anti-smoking campaigns. A slight reduction in the number of smokers is also anticipated due to growing health awareness among the population and the inconvenience caused by the smoking ban. RYO tobacco and cigarillos are the only two products projected to register volume growth, as a result of their popularity among young smokers. Vapour devices is expected to record value growth over the forecast period as many cigarette smokers are turning to these products as they can be smoked in almost all public places.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Switzerland with research from Euromonitor's team of in-country analysts.
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The Tobacco in Switzerland 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 Switzerland?
- What are the major brands in Switzerland?
- Which sector of the tobacco products market is the largest by value sales in Switzerland?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in Switzerland?
- Which sector is the most heavily taxed in Switzerland?
- Which companies dominate in the total tobacco market in Switzerland in terms of market share?
- What is the distribution channel split for the tobacco products market in Switzerland?
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This industry report originates from Passport, our Tobacco market research database.