Smokeless Tobacco, E-Vapour Products and Heated Tobacco in Austria

2021 DEVELOPMENTS

Heated tobacco products heat up, whilst e-vapour systems slow down

Electronic alternatives continued to see good growth in 2021, mainly as an intermediate step on the way to stop smoking. Heated tobacco, so far still limited to Philip Morris’ Iqos brand, only reappeared in 2020 and saw the best growth due to its novelty value.

Austria’s first Iqos Boutique helps boost interest in new spiral vending machines for all tobacco types

Austria’s first Iqos Boutique was opened in March 2021, in a highly frequented top location in the heart of Vienna (selling space of 130 square metres), as an important step to raise brand awareness. The site offers advanced customer services and a 30-day money-back guarantee for all devices.

Nicotine pouches see novelty value for consumers and high profit margins for retailers

Nicotine pouches, another very young category in Austria, is seeing strong growth in Austria driven by the launch of a high number of new brands, flavours and strengths. Led by industry giants British American Tobacco (Velo brand), Imperial Tobacco (Skruf) and JTI Austria (Nordic Spirit), the industry invested heavily in promoting these products – which have not affected by the ban on tobacco products and therefore can include advertising measures inside of tobacco specialist stores and on vending machines, as well as poster advertising and promotion teams, with free samples in public spaces and at events.

PROSPECTS AND OPPORTUNITIES

Heated tobacco products see a positive outlook, whilst e-vapour products face a more limited perspective

Heated tobacco products have a very positive outlook, which is expected to considerably curb the performance of e-vapour products over the forecast period. Still, given their relatively low level of sales by the end of the review period, and the different preferences of consumers and different retail channels, all categories in e-vapour products are estimated to keep seeing continued growth overall.

Increasing competition in heated tobacco expected to push down average unit prices over – unless stronger legislation kicks in

After a strong start, heated tobacco products are expected to become a popular choice for smokers in Austria, and increasing availability and competition are going to contribute to the growth. British American Tobacco, with its Glo brand, was on the starting blocks by the end of the review period and this increasing competition could also lead to a reduction in the unit prices of heated tobacco refills in the next years, creating savings potential compared to cigarettes as well.

Nicotine pouches set to attract a solid base of regular users over the forecast period

Discrete nicotine pouches are expected to establish a more solid base of regular users over the forecast period, when spaces for smoking will be more limited than ever and the image of smoking itself is going to worsen. At the same time, the flurry of new brands will come to an end, and the category is highly likely to largely concentrate on a handful of brands, with the multinational tobacco giants in favour due to the high investments in the visibility of their brands, alongside stronger consumer trust.