Despite a range of challenges, declines in key markets and an apparent approaching storm of high excise rates, strict regulation and viable alternatives, 2014 was a steady year for the global cigarettes market; a better one, indeed than the previous year. However, as global prevalence continues to fall and regulation targets cash-generating innovation, focus is on the strategies manufacturers are employing in the struggle to grow value and on what form the next generation of products will take.
On the back of a marginally better volume performance than in 2013, 5.7 trillion cigarettes were consumed in 2014, Excluding China, volumes declined by 2.5% as strong growth in major markets such as Indonesia and Turkey was balanced by difficulties in Russia and Vietnam.
Strong pack price growth contributed to healthy cigarette value growth in 2014, at its highest rate since 2011. Indeed, excluding China, like-for-like value growth was over 4.8%, double the equivalent rate in 2013 and significantly higher than in 2012. Eastern Europe saw value swell by 13%.
2014 saw the third consecutive year of average pack price growth with the global average reaching US$2.63. All regions saw growth, led by Latin America and Eastern Europe but sluggishness in Western Europe persisted, seeing growth of 2.9% held back by high levels of taxation and regulation.
While it is clear that vapour products, in particular e-cigarette tank systems, are growing in popularity rapidly there is distinctly less clarity about the full impact of the category on traditional cigarettes. E-cigarette users still comprise a minority of smokers in most markets and fewer still could be regarded as daily consistent users.
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