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
Smoker numbers continue to fall
In 2004, 25% of Ireland' s population described themselves as smokers compared
to 31% of the population in 1998 who smoked on a regular basis. The fall in
smoker numbers is expected to continue throughout the forecast period. This is
due to the intense legislative and educational efforts by the Irish government
to curb the health and social costs of smoking and the global trend towards
declining smoker prevalence in developed countries. The fall in the total
number of smokers is occurring simultaneously with new trends among those
continuing to smoke. For instance, the ban on smoking in the workplace is
expected to erode the number of occasional or social smokers while affecting
those who already smoke regularly to a lesser degree.
Drinking and smoking are strongly correlated in Ireland with the pub being the
traditional locus of a cigarette and a drink. Since the ban now separates the
two, there will be fewer temptations and opportunities for social smokers to
exercise their occasional habit. Regular smokers, however, are less likely to
break the habit. There is evidence from New York (where the effects of the
smoking ban are just coming to light) that the number of adult smokers has
fallen by 100,000 in less than a year. In addition to this, even those who
didn' t stop altogether, smoke on average 13% less. In Ireland the predicted
continued reductions in smoker prevalence and rate will have a significant
effect on tobacco volume sales.
Gallaher leads the pack
Gallaher (Dublin) Ltd continued to dominate cigarettes in Ireland in 2003.
John Player followed, with P J Carroll in third place. Gallaher maintained its
lead over its rivals through the overwhelming popularity of its premium
flagship brands, Benson & Hedges and Silk Cut. Gallaher was one of the first
tobacco companies in Ireland to release economic indicators on the wake of the
ban. However, as all companies are expected to experience some consequences,
it is unlikely that Gallaher will slip from its top slot over the forecast
period.
Volume sales falling
In line with other countries which have a developed tobacco industry,
cigarette volume sales are being adversely affected by price rises and falling
numbers of smokers. Since 2000, volume sales have been declining. However,
value sales declines are expected to be mitigated by the steep price rises put
in place by the Irish government. There appears to be no evidence that the
tobacco industry will stabilise over the forecast period and, if anything,
future measures imposed by the Irish Office of Tobacco Control could incite
further losses.
Ban impacting sales
Opinion within the tobacco industry remains mixed as to the long and short
term effects of the smoking ban. Evidence from other countries and cities that
have introduced smoking bans (such as Los Angeles, Vancouver and most recently
New York) indicate a short-term reaction followed by a period of normalisation
as smokers become accustomed to the new regulations. Smoking and drinking in
Ireland go hand in hand, and, as a result, pubs have reported dramatic sales
losses in the few months following the ban. It seems that with customers now
unable to enjoy a cigarette with their drink, many are choosing to drink at
home instead.
It is difficult to say with any certainty if the expected fall in cigarette
volume sales is a direct result of the ban or if it is part of a wider trend
towards greater health consciousness fuelled by mounting concerns over the
adverse effects and the ever-rising cost of smoking. The ban may not be a
direct cause of falling cigarette sales, but it may have served as a catalyst
to an ongoing trend. As such it is possible that sales may stabilise in the
long-term at a much lower level as the new patterns of permitted smoking are
assimilated into Irish culture.
Limited switch to low tar
Recent EU legislation that caps maximum tar yield at 10mg means that 2004
volume sales of high and mid tar cigarettes are predicted to fall from their
2003 levels. In reality the new laws mean that rather than brands being
withdrawn, existing brands have just been reformulated to meet the new
requirements.
High and mid tar cigarette volume sales are expected to be hit the hardest by
both the ban on smoking in the workplace and continued price rises. Industry
sources predict that the ban will erode the number of occasional smokers
leaving a residual group of those who smoke regularly. Part of the Irish
government' s drive to cut the costs of one of the highest incidence rates of
smoking-related heart disease in the world is a comprehensive educational
policy to inform people of the risks associated with smoking and, it is hoped,
prevent new smokers from taking up the habit. There is evidence to suggest
that among those who do not give up completely, a switch to lower tar brands
is inevitable.
View Cart
