Rising taxation and anti-smoking provisions have put downward pressure on smoking prevalence in Western Europe. The expansion of vapour and heated products in key markets such as the UK, Germany or France also explain the decline in cigarette sales, which is expected to further stand out due to the impact of the Covid 19 crisis in cigarette sales expected over the forecast period.
Strong decline in sales over the last five years in Western Europe due to growing taxation, illicit trade growth boosted by strong price differences between countries, increasing anti-smoking measures and strong growth of vapour and heated products across countries. The impact of COVID-19 on tobacco sales is expected to further deteriorate the negative trend seen over the review period.
France suffered the strongest decline in cigarette sales as a result of large increases in taxation and illicit trade, which hardest hit this country. Spain, Turkey and Portugal performed better than other countries in the region benefiting from economic recovery and improving disposable income, although tobacco sales in these countries is likely to be negatively affected by the impact of COVID-19 on tourist inflows in 2020 and beyond if travel restrictions persist.
The distribution landscape for cigarettes is quite fragmented in most Western European markets. Traditional retailers, in particular independent small grocers and other grocery retailers, are the main distribution channels in the region benefiting from high numbers of outlets and convenient locations, whereas modern grocery retailers such as supermarkets/hypermarkets and discounters are gaining share, favoured by modern retailing’s expansion across markets.
PMI, Japan Tobacco and BAT are the largest companies in most Western European markets, with Imperial Brands remaining behind the top three players. Japan Tobacco declined strongly over the review period due to its heavy reliance on sales in France, whereas PMI and BAT are better diversified geographically and gained share over Japan Tobacco. No other players compete on a regional level.
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