Abstract
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- 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
Smoking ban and minimum price decree do not help volume sales
Two important legislative initiatives were implemented in the Italian tobacco
market 2005, the smoking ban in January and the ' minimum price decree' in
July. The effects of the smoking ban were immediately felt, although towards
the end of 2005 there were some signs of recovery. Volume sales of the most
important sector, cigarettes, decreased. Cigars performed better, with a
slight volume increase compared with 2004. RYO tobacco remained a small
portion of the market, but was the most dynamic sector in terms of volume
growth. With the introduction of the minimum price decree, cigarette companies
were forced to put up prices for the lowest price band, leading to a levelling
of prices towards the top end of the range.
Litigations and consumer initiatives pose threat to tobacco companies
In 2005, an important achievement for victims of smoking-related diseases was
realised, when a court ruled in favour of the family of a diseased cancer
patient at the expenses of Ente Tabacchi Italiani SpA (ETI) (now BAT). The
company was held responsible for the patient' s death by not supplying
appropriate information on the risks of smoking. This sentence is an important
statement, both for consumers who are affected by smoking-related pathologies,
and for tobacco manufacturers who can expect an increase in such cases in the
future.
Similar in spirit is the campaign of collective litigations promoted in 2006
by the consumer associations Codacons and Gea Progetto Salute, appealing to
all cancer patients and people affected by smoking-related diseases to
denounce tobacco companies as responsible for their condition. In this way,
they aim to force tobacco companies to face their responsibilities, as well as
raising public awareness about the risks of smoking.
Philip Morris and BAT maintain the lead in 2005
The overall volume shares for cigarettes held by the leading players remained
relatively stable in 2005.
At national brand owner (NBO) level, the leading player was British American
Tobacco Italia SpA (BAT). However, at GBO (global brand owner) level, Philip
Morris Cos Inc continued to lead the Italian market. The company' s volume
share improved slightly compared with 2004, when the Marlboro brand had
delivered a poor performance in favour of cheaper brands. The levelling
imposed by the price decree sustained the performance of premium brands in
2005.
Dynamic volume growth of cigars and RYO tobacco will make them the focus of legislators during the forecast period
RYO tobacco and cigars recorded the most dynamic volume growth in 2005.
Although volume growth is likely to slow down during the forecast period; RYO
tobacco and cigars will become the focus of attention by legislators. In 2005,
an increase in the excise duty on RYO tobacco showed the concerns of
authorities over the rise of cheaper RYO cigarettes.
Sale of Toscano brand allows BAT to concentrate on cigarettes
In early March 2006, the sale of the Toscano brand was announced by BAT. The
cigar business was acquired by the Bologna-based Maccaferri Group via the Seci
holding. With this move, BAT will concentrate on cigarettes, retaining the
national brand MS.
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