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
Phasing out of high tar cigarettes switches cigarettes' profile in Portugal
In 2003, high tar products was the largest subsector, with volume sales
totalling over eight billion sticks, compared to just six billion for mid tar.
However, in 2004, high tar cigarettes (ie over 10mg of tar) are no longer
allowed to be sold in Portugal due to EU directives to phase them out. All
high tar cigarettes have been reclassified as mid tar with manufacturers
slightly lowering the tar content of their established high tar brands to 10mg
or below.
As a result of these changes, mid tar is the most popular form of cigarette in
Portugal in 2004, with volume sales estimated at just over 14 billion sticks.
The significant size of the sector is largely due to the reclassification of
high tar brands however. Most sales continue to come from the most popular
brands Marlboro and SG, both of which accounted for large volume shares of
cigarettes overall in 2003 (at 28% and 38%, respectively).
The Portuguese are also becoming more health conscious, and the already
long-established link between smoking and heart disease, cancer and
respiratory problems may eventually take its toll on higher tar brackets.
Consequently, a greater emphasis is being placed on the low and ultra low tar
brackets in Portugal. For the time being, however, mid tar cigarettes is
performing very positively, thanks to the shift away from high tar products.
Roll-your-own wins support from "grass roots" enthusiasts
Roll-your-own tobacco products, which have traditionally been quite small in
Portugal, are gaining support among smoking enthusiasts, for several reasons.
According to experts, buying smoking tobacco and rolling it with cigarette
papers has always been a time-consuming and awkward pastime, which has not
particularly compensated in terms of price advantages, nor greater variety.
However, the situation is now changing, as reflected by volume growth of
around 3% in 2004, to reach an estimated market volume of over 278 tonnes this
year. Industry analysts argue that while price hikes have made consumers more
cautious in their tobacco spending, imports of smoking tobacco at reasonable
rates have provided a very economical alternative to pre-rolled cigarettes.
The price advantages are becoming more acute, as the government focuses its
tax increases on pre-rolled, established tobacco products, and consumers
become more concerned with saving money on this regular habit.
Secondly, argue the experts, a curious trend has developed regarding the
paraphernalia surrounding rolling tobacco. While it was previously considered
awkward, many consumers (particularly youths) are considering it stylish to be
adept at rolling their own cigarettes. Furthermore, many consumers consider
this to be "back to grass roots" smoking, in which the act of rolling and
preparing the cigarette goes hand in hand with the actual ritual of consuming
the tobacco.
As a final note, manufacturers and distributors are aware of this growth in
consumption, and are increasingly marketing new blends and products in this
category. According to many industry analysts, the tendency to blend-your-own
rolling tobacco has taken on an importance similar to that of pipe tobacco in
its heyday.
Cigars becoming smaller but growing in volume
The market for cigars in Portugal has been positive over recent years, with
sales increasing by over 3 million units in 2004, in volume terms. This growth
was largely due to the growing availability of cigars, at more accessible
prices. Whereas cigars have traditionally been seen as a luxury product,
smoked usually by tobacco connoisseurs, or by those concerned with producing
an image of glamour and wealth, this profile of consumption is also undergoing
a radical change.
Cigars are becoming available in a wider variety of formats, and the smaller,
more accessible products are gaining strength as a result, with cigarillos
topping the bill at a volume increase of nearly 6% in 2004. More hectic
lifestyles are leading to the need to consume cigars in a more versatile
manner. Rather than relaxing after lunch and dinner with a huge Cuban cigar,
industry analysts argue that cigars are becoming the habitual smoke of choice
throughout the day. As a result, a growth in frequency of consumption
(particularly in cigarillos or small cigars), is pushing up volume sizes
overall.
Larger cigars, by contrast, have suffered from their exaggerated prices and
appeal to a reduced percentage of the population, declining by around 1% in
volume in 2004. The number of Portuguese connoisseurs preferring Cuban or
Dominican cigars to domestically produced products is dropping, and despite
the continued reduction of prices on imported premium cigars, the unit price
difference between these and domestic cigars remains huge.
Pipe tobacco suffers from ageing image
Pipe tobacco continued to decline in 2004, with a drop of nearly 5% in volume
terms, after a terrible year in 2003. According to industry experts, the
average age for pipe smoking is getting higher, now estimated at around 50, as
opposed to around 40 as estimated a decade ago. This shows that while pipe
smokers have aged, the younger tobacco consumers are failing to take up this
habit in earnest. "One should not forget that even smoking is subject to
fashion trends," argues one analyst, "and pipe smoking is simply no longer
fashionable."
This decline, from a volume of just over 39 tonnes in 1999 to under 25 tonnes
in 2004, is indicative of this fact. The pipe industry seems moribund from
these recent indications. The problems with pipe smoking are all too well
known: pipe tobacco is now no longer as commonly available as rolling tobacco,
making it the least widely available product on the tobacco market. Specialist
tobacco shops are the main outlet for pipe tobacco, and these are not common
in Portugal, particularly outside the main cities. Secondly, pipe smoking
requires both preparation (filling the pipe), maintenance (cleaning the pipe
and changing stems), as well as constant attention while lit. The image of
pipe smoking as a calm, elderly pastime is no longer appealing to the frenetic
generation of Portuguese consumers, and, perhaps more importantly, they now
prefer a quicker and more disposable format for their tobacco consumption.
Women constitute biggest growth group in tobacco
The tobacco market as a whole rose by around 4% in 2004, in current value
terms, largely thanks to a rise in numbers of smoking women throughout the
country. This phenomenon is causing some concern among health authorities and
drug observation entities in the country, particularly as it comes after
successive years of reductions in the numbers of smoking males in Portugal.
According to one study, nearly half of all Portuguese males over the age of 15
smoked in Portugal in 2002, compared with just over 10% of all women over the
age of 15. The number of smoking women is now thought to be around 15%, while
male figures have dropped to around 40%.
There are several causes for this change in demographic profile of smokers in
the country. Firstly, a growing number of working women has meant that women
spend more time outside the home, and more time in collective groups of
workers. According to several socio-demographic studies of smoking, there is a
direct link between certain types of work and the prevalence of smoking, most
notably factory work. The fact that more women are becoming integrated in this
type of establishment is contributing to an increase in the number of women
smokers, despite attempts by the Comissã de Preven6ccedil;ão ao Tabagismo (CPT) to
control this.
The Portuguese CPT is the body responsible for implementing measures and
programmes to reduce the consumption of tobacco in Portugal, as well as
disseminating information on the dangers of tobacco consumption. Several
reports have been released by this body in recent years indicating a drop in
tobacco consumption across the country, despite many market reports, company
accounts and independent analysis pointing to the opposite trend. In fact, the
tobacco market is estimated to have grown significantly, with value growth of
nearly 4% over the last year alone
View Cart
