Cigarettes in Australia

PROSPECTS

Rising prices fuel shift towards economy brands

High taxation rates continue to result in severe price hikes within cigarettes. As a result, volume sales continue to fall, although value sales are rising given major price hikes.

Unit price increases allow for positive growth

Despite falling demand, value sales continue to grow within cigarettes due to strong price increases. However, over the forecast period, value growth is set to slow as volume sales fall further and cigarettes become even less affordable.

Strong concerns over illicit trade

Illicit trade remains a significant concern for tobacco operators in Australia. This can be attributed to increasingly high unit prices of cigarettes due to growing excise rates, with illicit cigarettes packs typically only costing around a third of the price of regular ones.

COMPETITIVE LANDSCAPE

Focus on new innovative developments to attract consumers

Tobacco companies are looking to attract Australian smokers by offering new crushball flavoured cigarettes, such as Imperial Tobacco’s JPS crushball range. These crushball styled products provide new tastes, with consumers being able to squeeze small balls in the filter of a cigarette prior to smoking to release a liquid that masks the harsh flavour of the cigarette smoke on its own.

British American Tobacco remains in pole position

British American Tobacco Australia (BAT) maintained its leading position in cigarettes in 2018. However, the company saw a decline in sales share over the review period, largely due to gains made by Imperial Tobacco.

Focus on value offerings attracting price sensitive consumers

Due to rising tobacco taxation, which the government has indicated will continue until 2020, manufacturers are seeking to offer more economical options. For example, Imperial Tobacco’s Parker & Simpson was launched in March 2018 and is expected to appeal to non-brand loyal price sensitive consumers.

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