Cigarettes in Australia

PROSPECTS

Price-conscious consumers forced to buy economy brands

Economy-priced brands continued to account for a growing share of cigarette volume sales in 2017 due to several factors. Firstly, consumers continued to feel the impact of annual tax increases as well as the bi-annual indexation of tobacco excise, which have resulted in Australia having some of the most expensive cigarette prices globally.

Unit price increases ensure that value growth remains positive

Average unit price in cigarettes increased significantly in 2017, largely due to excise hikes. This meant that while retail volume sales fell sharply, value growth remained buoyant.

Illicit trade remains a significant concern for the industry

Illicit trade continued to be a significant concern for the tobacco industry in Australia in 2017. Industry sources highlight that price is a key issue deterring smokers from purchasing legal tobacco.

COMPETITIVE LANDSCAPE

British American Tobacco remains the leading player in cigarettes

British American Tobacco Australia (BAT) maintained its leading position in cigarettes in 2017. The company recorded a decline in share over the review period, largely due to gains made by Imperial Tobacco.

Imperial Tobacco overtakes Philip Morris for the first time

Imperial Tobacco became the second-ranked company in cigarettes in 2017 for the first time, overtaking Philip Morris. This move can be mainly attributed to the rapidly growing popularity of the company’s John Player Special (JPS) brand, with a notable spike in the brand’s share seen in 2014.

Manufacturers focus on offering consumers maximum value with their new product developments

Due to rising tobacco taxation, which the government has indicated will continue until 2020, manufacturers are seeking to offer consumers more economical tobacco options. One example of this is Imperial Tobacco’s Parker & Simpson brand, which was launched in March 2018.

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