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
Smokers fall
Tobacco companies in the UK are operating in an environment in which the
incidence of smoking amongst adults continues to fall. Although there has been
some resurgence, especially amongst teenage girls, the UK population as a
whole has begun to get the message regarding the health problems associated
with smoking. With more help than ever available through the NHS in terms of
support and counselling, notoriously hard-hitting anti-smoking advertisements
and yearly rounds of tax increases, smoking is a habit that is being
continually marginalised.
Taxes don' t fall
The operating environment continued to be complicated over the review period
by annual rounds of tax increases as part of government attempts to dissuade
smokers by increasing prices to prohibitive levels. This process is set to
continue over the forecast period, as reducing smoking has been identified by
the government as the quickest and cheapest way to ensure improvements in
public health without major investment in the NHS. Although high taxes have
been blamed by manufacturers and the pro tobacco lobby for encouraging the
flow of contraband into the UK, it would appear that tougher border controls
have begun to cut the supply and force consumers back into the legal market.
Economy segment dominates
The economy segment has benefited most from the upward movement in taxes, as
many consumers have continued to search for the most economical supply.
Economy brands such as Lambert & Butler have already ended the dominance of
premium brands such as Benson & Hedges, forcing Benson & Hedges to release its
own budget variant in 2003. With each tax hike it would seem the government is
pushing consumers to the economy, RYO or black market segments, a trend which
is visible in the number of budget brand developments that took place before
the full advertising ban in 2004.
Consolidated market
The UK tobacco market is dominated by cigarettes, which accounted for 91% of
value sales in 2004. The cigarette sector is largely in the hands of Imperial
Tobacco and Gallaher, which together accounted for almost 90% of volume sales
in 2003. Gallaher' s sector share fell from 41% in 2001 to 38% in 2003, whilst
Imperial Tobacco' s share increased from 45% in 2001 to 52% in 2003, due to the
success of the economy segment, the steady performance of Lambert & Butler,
and the acquisition of the distribution rights to the Marlboro brand.
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