Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Cigarettes; Cigars; Smoking tobacco
Executive summary
Trading down
The year 2005 was characterised by a strong trading down trend. Consumers
moved sharply towards the new value segment, as indicated by strong and rapid
growth of brands such as JPS, priced at €3.30 for 17. The value segment
squeezed private label, which, as a result, lost share.
Tax increases lead to contraction of legal market, growth in contraband
Consumption of duty-paid domestic cigarettes has fallen below 100 billion
sticks. Consumers have continued to move from cigarettes towards
eco-cigarillos, RYO and sticks. This movement is considered to be due to a
round of tax increases on cigarettes, the third and final instalment of which
was introduced in September 2005. Price increases have also led to an increase
in contraband, with sales reaching a reported high in 2005.
Final year for ' Sticks' production, replacement by fine cut
The EU ruled that, from 2006, sticks (self-assembly ready-made roll of
tobacco, also known as ' singles' ) must be taxed on a par with cigarettes.
Manufacturers therefore ceased their production of these products because they
saw no economic value in it. Sticks had experienced massive popularity and
growth in the years up to, and including, 2005, with some production centres
relying entirely on their manufacture. In their place manufacturers are
introducing fine-cut tobacco, which has greater volume and therefore appeals
to consumers no longer served by sticks products.
A tobacco friendlier government?
In September 2005 the ruling coalition of the SPD and the Greens failed to
secure a third successive mandate to govern. In its place a grand coalition of
the SPD and the CDU, led by chancellor Angela Merkel, now rules the country.
Mrs Merkel has signalled her intent to appeal against the EU advertising ban
on tobacco. Previous statements from the CDU signal this government is less
inclined to raise duties on tobacco products and is, in general, more tobacco
friendly than its predecessor.
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