tobacco in 2015: new research insights
TRANSCRIPT
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The Tobacco Categories’ Performance at a GlanceKEY FINDINGS
Cigarettes• 5.7 trillion sticks sold: 90% of most markets• Legislation and Tax impacting volume sales• Price becoming main purchasing decision
Roll-your-own• Growth in EE (vols grew 4%) but slowdown in
WE - weakening of price advantage
Cigars & Cigarillos• Dominated by US and WE (US + DE = >60%)• Shrinking vols in mature markets• Growth from developing markets (CN, IN, GCC)
-0.0%
-0.4%
2013-14:
Pipe tobacco• Growth in EE (vols grew 4%) but slowdown in
WE - weakening of price advantage
Smokeless Tobacco• Dominated by US, SE and IN (bans in latter
cause of shrinking volumes)• Northern European and US snus grows• No reduced harm credentials allowed
Latest trends:
-14.5%
-3.8%
-0.1%
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Cigarettes’ Troubled Future as Alternatives AdvanceKEY FINDINGS
1 in 2 smokers by 2019 will be in China
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Vapour Devices – Latest TrendsKEY FINDINGS
VAPING POPULATION
13mn regular sole or dual users of vapour devices in 2014
VAPOUR DEVICES
>6bn US$6.5bn of vapour device sales globally in 2014
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Vapour Devices - How does it Compare to Other Categories?KEY FINDINGS
US$ 6.2 billion US$ 2.4 billion
E-cigarettes NRTLarge cigars
US$ 5.1 billion
• World’s 20th largest cigarette market equivalent
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Cigarettes’ Unit Price on Ever-Upward TrajectoryPRICE AND INNOVATION
Midd
le Eas
t and
Afri
ca
Asia P
acific
Easte
rn E
urop
e
Wor
ld
Latin
Am
erica
North
Am
erica
Wes
tern
Eur
ope
Austra
lasia
0
4
8
12
-2261014
Average Cigarette Pack Prices – Regional Comparisons 2014
Price per pack of 20 in US$
US
$
% g
row
th 2
01
3
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Pack innovation Product innovation
• Innovative closures• Tactile finishes, including raised
surfaces such as embossing and bevelled edges
• Pack size variations (eg XL pack sizes)
• Flavour capsules (double menthol)• Recessed filters• Superslims/ demislims/ microslims
(superslims with capsule)• Additive-free tobacco• Less Smoke Smell• Length (100s)• Cigarette format variations (eg Pocket
Packs, more compact sizes)
The Role of Innovation in Re-Engaging ConsumersPRICE AND INNOVATION
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Top Five Global Cigarettes PlayersPRICE AND INNOVATION
World cigarettes company share 2014 (% volume)
44.2%
14.6%
11%
8.2%
3.8%
Company’s leading brand 2014 (world ranking)
(2)
(1)
(12)
(5)
(58)
Note: Arrow indicates direction of growth/decline in share between 2013-2014
8 out of top
10 global
brands
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Heralding a ‘New Generation’ in Legislation
LEGISLATION
Core
• Advertising and sponsorship bans
• Descriptor bans• Tax-driven excise
increases
Standard
• Public smoking bans• POS display bans• Graphic health warnings
Next generation
• Plain packaging• Flavour bans• Variant limits• Turbo taxation• Birth year ban
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The Future of Legislation
LEGISLATION
EU TPD 2014
65% graphic health warnings
Ban on menthol cigarettes (2020)
No ban on slim cigarettes
Ban on packs of 10 sticks
New “positive” ingredients list
Ban on misleading labelling (eg “organic”)
E-cigarettes regulated as tobacco
Plain packaging by
stealth?
Eu
rop
ean
Un
ion
ROW Plain packaging (Australia)
Flavour bans (US, Brasil)
Variant limits (Uruguay)
Turbo taxation
Birth year smoking ban (Tasmania)
Au
stra
lia
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Other FMCG Industries Next?LEGISLATION
• Taxation (alcohol, ‘soda tax’, ‘butter tax’)
• Saturated fat content limits• Portion size• Acrylamide……………………….etc
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The Irresistible Allure of Illicit TradeTAXATION, PRICING AND ILLICIT TRADE
• £20
• £16,000
• £50,000
• £1 million
Largest seizure in EU – 120mn sticks of cigarettes
£40 million
• The global illicit trade market is referred to as the ‘third tobacco market’, ie the third biggest ‘player’ in the world, making more money than BAT and chomping at the heels of PMI.
• An international brand bought fully tax paid in Ukraine, and sold on the street in the UK at half its UK retail price can still generate the following profit:
WORLD ILLICIT TRADE
1in10Cigarettes are illicit (incl China) in 2013
THANK YOU FOR YOUR ATTENTION
Zora Milenkovic Head of Industry Research
Shane MacGuill Senior Analyst – Tobacco