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Strategy Briefing

Tobacco in Western Europe

Feb 2014

US$1,325

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About This Report

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If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE!

The future of the global industry might be epitomised in Western Europe, where once powerful smoking cultures are shrinking, with cigarette volumes driven down by higher prices, public smoking bans, greater health consciousness and the practice of smoking being gradually demonised and marginalised. Pricing strength has always been the saving grace but things are changing here too.

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Overview

Why buy this report?

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.

Cigarette market in relentless volume decline

Cigarette sales in Western Europe declined in volume terms more than any other major region in 2012, facing pressures from weak economic conditions and rising prices.

Pricing strength weakening

Comparing the regions over the last five years demonstrates the sea change taking place, with average price paid per pack in Western Europe growing by only 21%, compared with some 58% in Asia Pacific and 69% in Latin America. Western Europe was the only region to record price growth lower than the global average over the 2007-2012 period.

RYO on the up due to price advantage

High prices cause cigarette smokers to shift towards cheaper alternatives, with sales of RYO being the main beneficiary. RYO cigarettes in Western Europe have a per stick price advantage over factory made cigarettes which averages over 40%.

Smoking prevalence down

While smoking prevalence varies widely within the region, the overall trend is downwards. The pace of decline in smoking numbers is slowing, but the smokers who remain are also smoking fewer cigarettes on average.

Legislative environment deteriorates

The revised EU Tobacco Products Directive is likely to lead to a flavours ban, which will destroy the highly profitable menthol cigarette (and capsule technology) market, and impose graphic anti-smoking images covering 65% of packs front and back. In addition, the UK government seems to have U-turned on its sidelining of plain packaging, and it now seems likely that England will join Ireland and Scotland in establishing plain packaging legislation like that in Australia. These moves make EU plain packaging legislation more likely.

What this report includes

Top-level strategic analysis of how major consumer trends will influence global markets
Consumer insight
Impact across all relevant consumer markets
Unique graphics and case studies
Key market snapshots
Accompanying presentation to synthesise main findings

Why buy this report

Identify factors driving change now and in the future
Understand motivation
Forward-looking outlook
Briefings and presentation should provoke lively discussion at senior level
Take a step back from micro trends
Get up to date estimates and comment

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Introduction

Scope

Key findings

Shock, horror: Values trend down in Western Europe

Premiumisation and price no longer enough

Worst hit Western European markets

Region and Country Highlights

Western European cigarette volumes continue to decline

Few pockets of growth remain in a shrinking market

Western Europe: Cigarette market outlook

Smoking Prevalence

Fewer smokers, smoking fewer cigarettes

Smoking prevalence and smoking population outlook

Legislation Overview

Western Europe legislation: Summary table

EU: Revised Tobacco Products Directive: Four key decisions

Western Europe: Legislation with future significance

Price

Cigarette price analysis 2007-2012 – Western European weakness

Cigarettes: Regional price discrepancies as wide as ever

Western Europe: Pricing trends

Western Europe: Pricing trend variations

France: Prioritising health over tax revenue

The tax and price connection

Taxation and pack price analysis: Selected countries

Economy price band grows in most markets

Western Europe: Price band trends in leading markets

Cigarettes Innovation

Price is the main driver of innovation

Germany focus: Larger packs and additive-free

UK focus: Smaller pack growth… for now

Cigarette length innovation: Pocket packs for cheaper perception

Adding value whilst not increasing unit price

“Sub-value” sub-brands to capture downtraders

Illicit Trade

Western Europe: Cash strapped consumers drive illicit trade

Western Europe – illicit whites on the rise

Spain: Illicit rise hiatus in troubled Spanish market

Companies and Brand Strategies

International tobacco companies dominate Western Europe

International brands lose volume but shares robust

PMI – shifting Marlboro sub-brands between price bands

BAT premiumises Pall Mall (economy)

Imperial: Glide Tec innovation

Smoking Tobacco

Western Europe: The smoking tobacco alternative to cigarettes

Western Europe: RYO versus cigarettes

Cigarettes versus alternatives on price: RYO and e-cigarettes

Western Europe RYO: Analysis

Netherlands: RYO declines and looks for cheaper alternatives

Western Europe RYO – competitive analysis

Cigars

Western Europe: Cigars market contracts with tobacco market

Cheap cigarillos offer a smoking alternative

Germany: Tax impact on eco-cigarillos

Fragmented Western European cigars market

Distribution

Wide variation in distribution style within Western Europe

Prospects

TPD-related change likely to dominate next five years

Definitions

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Megatrends

Strategy Briefing

Tobacco in Western Europe

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Cigarette market in relentless volume decline

Pricing strength weakening

RYO on the up due to price advantage

Smoking prevalence down

Legislative environment deteriorates

What this report includes

Why buy this report

Want to find out more about this report?

Table of Contents

Introduction

Scope

Key findings

Shock, horror: Values trend down in Western Europe

Premiumisation and price no longer enough

Worst hit Western European markets

Region and Country Highlights

Western European cigarette volumes continue to decline

Few pockets of growth remain in a shrinking market

Western Europe: Cigarette market outlook

Smoking Prevalence

Fewer smokers, smoking fewer cigarettes

Smoking prevalence and smoking population outlook

Legislation Overview

Western Europe legislation: Summary table

EU: Revised Tobacco Products Directive: Four key decisions

Western Europe: Legislation with future significance

Price

Cigarette price analysis 2007-2012 – Western European weakness

Cigarettes: Regional price discrepancies as wide as ever

Western Europe: Pricing trends

Western Europe: Pricing trend variations

France: Prioritising health over tax revenue

The tax and price connection

Taxation and pack price analysis: Selected countries

Economy price band grows in most markets

Western Europe: Price band trends in leading markets

Cigarettes Innovation

Price is the main driver of innovation

Germany focus: Larger packs and additive-free

UK focus: Smaller pack growth… for now

Cigarette length innovation: Pocket packs for cheaper perception

Adding value whilst not increasing unit price

“Sub-value” sub-brands to capture downtraders

Illicit Trade

Western Europe: Cash strapped consumers drive illicit trade

Western Europe – illicit whites on the rise

Spain: Illicit rise hiatus in troubled Spanish market

Companies and Brand Strategies

International tobacco companies dominate Western Europe

International brands lose volume but shares robust

PMI – shifting Marlboro sub-brands between price bands

BAT premiumises Pall Mall (economy)

Imperial: Glide Tec innovation

Smoking Tobacco

Western Europe: The smoking tobacco alternative to cigarettes

Western Europe: RYO versus cigarettes

Cigarettes versus alternatives on price: RYO and e-cigarettes

Western Europe RYO: Analysis

Netherlands: RYO declines and looks for cheaper alternatives

Western Europe RYO – competitive analysis

Cigars

Western Europe: Cigars market contracts with tobacco market

Cheap cigarillos offer a smoking alternative

Germany: Tax impact on eco-cigarillos

Fragmented Western European cigars market

Distribution

Wide variation in distribution style within Western Europe

Prospects

TPD-related change likely to dominate next five years

Definitions

Definitions

Why buy this report?