Cigarettes and Smoking Cessation Aids - US - March 2008

Table of Contents

• Scope and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Cigarette market remains strong, despite legislation, social mores
• Cessation market tiny relative to cigarette market
• Retailing separately not beneficial to NRT sales
• Convenience stores main retail location, followed by tobacco stores
• Hard to compete with big tobacco companies
• GlaxoSmithKline dominates smoking cessation market
• Product innovation directly addresses increased difficulty of lighting up
• Market Size and Forecast--Tobacco Products
• Key points
• Smoking rates stabilize
• Cost drives the market for cigarettes down
• Smoking fewer cigarettes means less sales
• Smoking habits follow trends set by legislation
• Strong potential for growth in NRTs, smokeless tobacco
  • Figure 1: Total U.S. sales and forecast of cigarettes and tobacco products, at current prices, 2003-10
  • Figure 2: Total U.S. sales and forecast of cigarettes and tobacco products, at constant prices, 2003-10
• Market Size and Forecast--Cessation Products
• Key points
• Are NRTs effective as a cessation aid?
• Continued increase in cigarette prices should benefit cessation aids
• Chronic use benefits market
  • Figure 3: U.S. FDMx sales and forecast of smoking cessation products, at current prices, 2003-11
  • Figure 4: U.S. FDMx sales and forecast of smoking cessation products, at current prices and constant prices, 2003-11
• Competitive Context
• Smokeless cigarettes and nicotine delivery systems
• Zyban (buproprion/Wellbutrin)
  • Figure 5: Brand of smoking cessation aid used, 2003 and 2007
• Non-product-based methods of quitting smoking
• Segment Performance--Overview
• Key points
• Tobacco segment performance
• New products and private label cannibalize sales, rather than adding to them
• Smokers have an oral fixation, as it turns out
  • Figure 6: FDMx sales of cessation products, by segment, 2003-07
  • Figure 7: FDMx sales of cessation product, by segment, 2005 and 2007
• Retail Channels
• Key points
• Promotion affects retail distribution of cigarettes
• Consumers perceive smoking cessation aids as a pharmaceutical
• Competition from Internet, black market sales
  • Figure 8: Cigarette sales, by retail channel, 2003 and 2007
• Retail Channels--C-stores
• Key points
• Convenience and price make c-stores/gas stations the leading distribution outlet
• Price
  • Figure 9: Convenience store sales of cigarettes and tobacco products, at current prices, 2003-07
  • Figure 10: Convenience store sales of cigarettes and tobacco products, at constant prices, 2003-07
• Retail Channels--Tobacco Stores
• Key points
• Quality and selection important to today' s smoker
• Internet necessary for tobacco store success
  • Figure 11: Tobacco store sales of cigarettes and tobacco products, at current prices, 2003-07
  • Figure 12: Tobacco store sales of cigarettes and tobacco products, at constant prices, 2003-07
• Market Drivers
• Health-concerned city and state policies make smoking difficult
  • Figure 13: Attitudes towards smoking legislation, January 2008
• Corporate wellness programs
• Reward and punishment
• Leading Companies
• Key points
• Philip Morris carries over half the market
  • Figure 14: FDMx sales of leading tobacco and anti-smoking companies, 2006 and 2007
• Brand Share--Cigarettes and Other Tobacco Products
• Key points
• If I' m going to do it, I might as well do it up
• New lines, new campaigns bolster Camel sales
• Newport aided by popularity in urban market
• Brand awareness stronger than manufacturer awareness
  • Figure 15: FDMx brand sales of cigarettes and tobacco products in the U.S., 2006 and 2007
• Lighter smokers spend more per pack
  • Figure 16: Branded or private label cigarette smoked, by daily cigarette consumption, May 2006-June 2007
• Brand Share--Smoking Cessation Products
• Key points
• Private label continues to gain ground
  • Figure 17: FDMx brand sales of nicotine replacement treatments, 2006 and 2007
• Brand Qualities--Changes for Camel, Marlboro, Kool
• Overview
• Camel chases women
• Marlboro Smooth takes aim at Newport and Kool
• Kool XL targets younger smokers
• Waiting for the black market to sour
• Innovation and Innovators
• Key points
• Marlboro offers up a quicker fix
• Invasion of the potentially reduced-exposure products
• Smokeless Snus
• Advertising and Promotion
• Regulated environment favors discounts and sponsorships
• Online promotions limited to consumers with substantial initiative
  • Figure 18: Ad spending by tobacco and anti-smoking brands, 2005 and 2006
• Marlboro continues to forego traditional avenues of promotion
• Camel backs down from print ads
• GlaxoSmithKline
• NicoDerm
  • Figure 19: TV ad for GlaxoSmithKline' s NicoDerm CQ nicotine patch, 2008
• Nicorette
  • Figure 20: TV ad for GlaxoSmithKline' s Nicorette Anti-smoking gum, 2007
• Commit
  • Figure 21: TV ad for GlaxoSmithKline' s Commit anti-smoking lozenges, cherry flavor, 2007
  • Figure 22: TV ad for GlaxoSmithKline' s Commit anti-smoking lozenges, mint flavor, 2007
  • Figure 23: TV ad for GlaxoSmithKline' s Commit anti-smoking lozenges, 2007
• Smoking Habits and History
• Two thirds of current regular smokers have tried to quit
  • Figure 24: Smoker status, by age, January 2008
• Incidence of smoking
  • Figure 25: Cigarette smoking, 2001 and 2007
  • Figure 26: Usage of cigarettes, by age, May 2006-June 2007
• Efforts to Quit Smoking
• Usage of nicotine replacement therapy products
  • Figure 27: Use of anti-smoking products in the previous year, 2001 and 2007
• Vast majority of current smokers have tried to quit multiple times
  • Figure 28: Number of quit smoking attempts, by smoker status, January 2008
• Products Used in Efforts to Quit Smoking
• "Cold turkey" remains the most popular quitting method
  • Figure 29: Type of anti-smoking product tried in last 12 months, by daily cigarette consumption, May 2006-June 2007
• Cessation methods compared between all attempts and successful attempts
  • Figure 30: Ways of trying to quit smoking, by attempt, January 2008
• Private label drives increased usage of nicotine gum
  • Figure 31: Method tried to quit smoking in previous year, 2001 and 2007
• Frequency of Cigarette Usage
  • Figure 32: Number of cigarettes smoked per day, 2001 and 2007
• Men who smoke average two more cigarettes per day than women
  • Figure 33: Number of cigarettes smoked daily, by gender, May 2006-June 2007
• Older smokers and whites should be targeted for cessation products
  • Figure 34: Number of cigarettes smoked daily, by age, May 2006-June 2007
  • Figure 35: Number of cigarettes smoked daily, by race/ethnicity, May 2006-June 2007
• Targeting spouses and the gift market for cessation aids
  • Figure 36: Number of cigarettes smoked daily, by marital status, May 2006-June 2007
• Race and Ethnicity
  • Figure 37: Smoking, by race/ethnicity, 2003 and 2007
  • Figure 38: Attitudes towards smoking-related illness, by race/ethnicity, January 2008
• Menthol use rising due to the increased importance of black smokers
  • Figure 39: Type of cigarette smoked, 2003 and 2007
• Attitudes and Motivations Regarding Smoking
• Introduction
• Compromise solutions and addiction as an illness
  • Figure 40: Smoking/quitting, compromise solutions, and opinions on addiction as an illness, January 2008
• More than one in three current smokers have never considered long-term health impacts
  • Figure 41: Expected outcome of smoking habit, January 2008
• You get what you pay for
  • Figure 42: Existence of favorite brand and interest in quality, January 2008
• Striking interest in better-for-you product
  • Figure 43: Attitudes towards making choices of what to smoke, January 2008
  • Figure 44: Attitudes towards quitting smoking, January 2008
• Why the majority of current smokers will not try NRTs
  • Figure 45: Attitudes towards cessation aids, January 2008
• Reasons for Smoking
• Smokers start young
• Calming the nerves
• Nicotine addiction may be a symptom of a larger psychiatric problem
• Smoking may be a symptom of a larger health problem
  • Figure 46: Usage of cigarettes, by ailment, January 2008
  • Figure 47: General attitudes and behaviors around smoking, January 2008
• Appendix: Trade Associations