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Strategy Briefing

Global Tobacco: Key Findings Part I - Cigarettes

Aug 2017

US$1,325

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2016 saw a continuing uprooting of the received wisdom about the world’s largest cigarette market, China, as its volume decline amplified to record levels in modern history. Ongoing decline continued in other regions with some major markets in the Middle East and Africa and Asia Pacific the only ones to see volume growth. Increasingly, focus is turning to alternative products, particularly the growth of heated tobacco which promises a longer-term future for the industry.

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Overview

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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

Cigarettes volume -3.2%

As the Chinese market deteriorated further, 2016 volume performance was worse again than 2015’s relatively poor showing. Such is China’s huge impact that the volume decrease, excluding China, at 1.4%, was an improvement on last year’s 1.8% decline as stability in some major markets and growth in parts of AP and MEA boosted volumes.

Average pack price +2.4%

Average pack price growth moderated in 2016 with the global average up 2.4% to reach USD2.48 (USD3.02 excluding China). All regions saw growth, led by Australasia and Eastern Europe, but rates of increase in Western Europe, the Middle East and Africa and China dragged significantly with all seeing growth of less than 1.5%.

Cigarettes value +1.8%

Substantial declines in China, weighed heavily on global cigarette value growth in 2016, recording, at 1.8%, the lowest rate of value growth in at least two decades. Excluding China however, progress on value was a more robust 4.4%. All regions outside Asia Pacific saw growth with the Middle East and Africa, Latin America and Eastern Europe in double digits.

Illicit trade volume -0.3%

The total volume of illicit cigarettes consumed in 2016 remained flat as continuing reductions in China aligned with lower demand in Western Europe. However, excluding China volumes grew 2% in 2016, driven in particular by the remainder of Asia Pacific, and Eastern Europe as total penetration rose slightly 10.6%.

Heated tobacco products value +189.2%

2016 was a year that underlined the potential of heated tobacco products to offer the industry a medium to longer term future away from combustible products. As yet, Japan remains the clear success story with respect to adoption of the product (forecast to reach 22% by 2021) but the industry claims promising (albeit slower growth) in a number of other international markets.

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Introduction

Scope

Key Findings

The tobacco market in 2016

Key drivers of global cigarettes

Headline growth and decline trends for 2016

Category growth comparisons over 2011-2016: Pipe the big mover

Tobacco products market outlook over 2016-2021

Vapour growth to slow but still significant

Prospects for leading global markets

Crystal ball downhill all the way for cigarette volumes

Geographic Focus

Cigarette volume/value forecast by region over 2016-2021

All about price: Regional cigarette market analysis over 2011-2016

Where cigarettes growth came from in 2016

Where (total) cigarettes growth and decline came from 2011-2016

China’s future of steady decline

US: Rejoining the community of international markets

Russia: Major disruption as excise taxes and tobacco control bite

Indonesia: Challenges emerging in world’s second largest market

Japan: The proving ground for heated tobacco consumption

Defining market cluster characteristics

Emerging versus developing versus mature market trends

Smoking Population

Trends in smoking incidence and per capita consumption by region

Where the smokers are: Population analysis by region

Greatest prevalence declines seen in Russia and Kazakhstan

Tobacco industry needs to consider appeal to Generation Z

A significant generational shift provides issues to address

Illicit Trade

Illicit penetration: Regional comparisons 2016

Regional trends in illicit: Historic

Regional trends in illicit trade - forecast

Malaysia: One of the world’s only majority illicit markets

Push to strengthen fight against illicit through the Protocol

Articles 15 and 16 of EU TPD mandate track and trace system

Legislation and Price

Legislative restrictions on the global tobacco industry

Plain packaging remains the single largest challenge to the industry

Flavour bans expansion begins to gather pace

Nicotine elimination emerges as the next regulatory challenge

Assessing the impact of regulation

Cigarettes - global price analysis

Cigarettes: Pricing outlook

Global pack affordability overview

5-year forecast: Change in affordability 2016-2021

Top 10 most and least affordable markets

Selected market attractiveness by revenue and affordability

Price band forecast displays the impact of price and regulation

Companies and Brands

Top 10 cigarettes companies: How they performed in 2016

Brands: How they performed in 2016

Migration an increasingly key portfolio management tool

Pending/possible regulation impacting innovation

Selected current prominent innovations (1)

Selected current prominent innovations (2)

BAT’s modular use of innovations on brand umbrellas

Changing face of innovation in next-generation nicotine

Winston: Making solid, if unspectacular, headway

Marlboro: Innovations help to retain volumes

Rothmans: Combination of old and new feeds sizeable growth

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Megatrends

Strategy Briefing

Global Tobacco: Key Findings Part I - Cigarettes

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Cigarettes volume -3.2%

Average pack price +2.4%

Cigarettes value +1.8%

Illicit trade volume -0.3%

Heated tobacco products value +189.2%

Want to find out more about this report?

Table of Contents

Introduction

Scope

Key Findings

The tobacco market in 2016

Key drivers of global cigarettes

Headline growth and decline trends for 2016

Category growth comparisons over 2011-2016: Pipe the big mover

Tobacco products market outlook over 2016-2021

Vapour growth to slow but still significant

Prospects for leading global markets

Crystal ball downhill all the way for cigarette volumes

Geographic Focus

Cigarette volume/value forecast by region over 2016-2021

All about price: Regional cigarette market analysis over 2011-2016

Where cigarettes growth came from in 2016

Where (total) cigarettes growth and decline came from 2011-2016

China’s future of steady decline

US: Rejoining the community of international markets

Russia: Major disruption as excise taxes and tobacco control bite

Indonesia: Challenges emerging in world’s second largest market

Japan: The proving ground for heated tobacco consumption

Defining market cluster characteristics

Emerging versus developing versus mature market trends

Smoking Population

Trends in smoking incidence and per capita consumption by region

Where the smokers are: Population analysis by region

Greatest prevalence declines seen in Russia and Kazakhstan

Tobacco industry needs to consider appeal to Generation Z

A significant generational shift provides issues to address

Illicit Trade

Illicit penetration: Regional comparisons 2016

Regional trends in illicit: Historic

Regional trends in illicit trade - forecast

Malaysia: One of the world’s only majority illicit markets

Push to strengthen fight against illicit through the Protocol

Articles 15 and 16 of EU TPD mandate track and trace system

Legislation and Price

Legislative restrictions on the global tobacco industry

Plain packaging remains the single largest challenge to the industry

Flavour bans expansion begins to gather pace

Nicotine elimination emerges as the next regulatory challenge

Assessing the impact of regulation

Cigarettes - global price analysis

Cigarettes: Pricing outlook

Global pack affordability overview

5-year forecast: Change in affordability 2016-2021

Top 10 most and least affordable markets

Selected market attractiveness by revenue and affordability

Price band forecast displays the impact of price and regulation

Companies and Brands

Top 10 cigarettes companies: How they performed in 2016

Brands: How they performed in 2016

Migration an increasingly key portfolio management tool

Pending/possible regulation impacting innovation

Selected current prominent innovations (1)

Selected current prominent innovations (2)

BAT’s modular use of innovations on brand umbrellas

Changing face of innovation in next-generation nicotine

Winston: Making solid, if unspectacular, headway

Marlboro: Innovations help to retain volumes

Rothmans: Combination of old and new feeds sizeable growth

Why buy this report?

Want to find out more about this report?

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