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111 posts categorized "Tobacco"

March 12, 2015

What does the Plain Pack Ruling mean for the UK and Irish Tobacco Markets?

Even though there has been much debate over plain packaging in the tobacco industry, until now it has been isolated in the Australian market. With this new ruling in the UK and Ireland, we anticipate plain packaging legislation to pass in other major markets in the near future. By our estimate, plain packaging in Australia has cut down on smoking prevalence by 45% since its introduction to the market four years ago. This legislation will make the operating environment much more challenging for the tobacco industry moving forward. Watch the video for complete insights.

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March 7, 2015

Greece Could Raise A Billion Euro A Year If It Eliminates the Illicit Cigarette Trade

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

But that’s the proverbial big ‘if’. According to various reports the freshly elected government of Greece led by the left-wing Syriza party has agreed terms with the Eurogroup on Tuesday morning on a four-month extension of the country’s €240 billion bailout programme. As part of the negotiating process, the Greeks submitted a document giving a number of assurances to Eurozone members summarised by the apparent pledge that the new government’s tackling of Greece's ‘humanitarian crisis’ would have 'no negative fiscal effects'.  The document reportedly outlines a plan to increase state funding by strengthening the country’s currently very weak tax enforcement and combating corruption including (but by no means exclusively) by cracking down on the illicit trade in tobacco - so what is the scale of Greece’s illicit tobacco trade and crucially how much could potentially be raised by eliminating it?

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March 4, 2015

The Rising Power of Female Consumers

Female-Consumer-Banner

The global female population totalled an estimated 3.6 billion in 2014 and is expected to reach 4.2 billion by 2030. Average disposable income amongst women is the highest it's ever been, and women are living longer than men.

What are you doing to reach this growing market?

Recording
View now to learn:

  • The size and distribution of the female consumer market
  • Literacy and education rates
  • Labour participation
  • Purchasing power

 

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January 27, 2015

Estimating Category Leaders in FMCG Industries

Virgilijus NaruseviciusAnalyst Insight by Virgilijus Narusevicius - Senior Data Scientist

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In this article, we have attempted to characterise category leaders across FMCG industries and the typical market shares they achieve. “Category leader” is generally a highly coveted status as it allows price-setting power and a better ability to influence category trends, enables economies of scale and implies a better bargaining power over retailers and suppliers. It also suggests that the company is doing many things right and it is thus rather common to benchmark against the category leaders and study their past strategies. However, category leader shares vary between industries and a successful company in one industry may differ from another.

 

Figure 1: Average Category Leader Share across FMCG Industries

CAMI1

 

Source: Euromonitor International

Note:  Retail value sales

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December 18, 2014

Cuba: Key Market of the Future

EMI_Cuba-v1.2

Cuba is identified as one of the 20 Markets of the Future that will offer the most opportunities for consumer goods companies. Accelerating market liberalization and improvement of business environment is anticipated to boost employment and income growth, resulting in a sizeable increase in consumer expenditure by 2020. Alcoholic drinks is projected to become the largest consumer market over the forecast period, with spirits and beer being the most promising categories.

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Diplomatic Normalisation Promises Cuban Evolution for US Cigar Market

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

The almost total thawing out of diplomatic relations between the US and Cuba, announced yesterday, 17th December by President Barack Obama, could lead to the smouldering of Cuban cigars from coast to coast in the US$8 billion dollar US cigar market. The biggest winners from the relaxing of the trade embargo with Cuba are likely to be Imperial Tobacco plc, the world’s 4th largest international tobacco company and part owner, with the Cuban government of the state cigar company Corporacion Habanos and the US tobacco specialist stores which currently supply around 40% of the country’s cigars and through which high price point Cuban offerings will largely be distributed.

Imperial Tobacco inherited  a 50% holding in the Cuban state cigar company Corporacion Habanos through its purchase of the French-Spanish tobacco giant Altadis in 2007. It is thought that the company, which distributes the Cohiba and Montecristo premium cigar brands outside the US and non-Cuban brands such as Romeo y Julieta within it, has been anticipating the relaxation of the trade embargo for some time and has plans to ramp up production by 50% to meet increased demand. However, in an analyst briefing in November 2014, Imperial CEO Alison Cooper made reference to some supply issues in Cuba which may or may not impact this target:

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November 27, 2014

Assessing the Illicit Trade in Cigarettes and Foreseeing One in Nicotine Liquid

Shane_MacGuillAnalyst Insight by Shane MacGuill - Senior Tobacco Analyst

Euromonitor’s latest global briefing on the illicit trade in tobacco products assesses the nature, impact and logistics of the 570 billion stick, US$39 billion global market in illicit cigarettes. It outlines how the illicit trade in cigarettes, while often seen as, if not a victimless crime, a misdemeanor which the victims (arrogant tobacco conglomerates and capricious governments) deserve, is in fact a phenomenon which damages the best interests of a range of public and private organisations, including its consumers.

Eliquid.pngWhile price is of course the infamous key determinant of demand for illicit products one of the enabling factors discussed in the report is the existence of constraining regulation which creates absences in the legal market. An example of this is the potential for increase in illicit trade from the forthcoming ban on menthol cigarette products in the European Union’s Tobacco Products Directive. However, the report goes on to look at the existing and potential de facto illicit trade in electronic cigarettes rooted in restrictive regulation, in particular of nicotine liquid.

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November 25, 2014

India Planning Outright Ban on E-Cigarette Products

Shane_MacGuillAnalyst Insight by Shane Mac Guill - Senior Tobacco Analyst

An unfortunate trend to the radical regulation of e-cigarettes progressed further today as Reuters reports that the Indian government is considering a total ban on the products. We have written recently on the WHO’s flawed policy stance on e-cigarettes, which fed into a policy position from the 6th Conference of the Parties to the FCTC in Moscow in mid-October, leaving open the option of bans for the products. It is in this prohibitionist context that the proposed measures in India need to be viewed. 

Eon.pngWhile smoking prevalence in India, because of the pervasive use of smokeless tobacco products is relatively low at 6.5%, the sheer size of the population means that there are 52 Indian million smokers, the 3rd largest global smoking population behind China and Indonesia. In total there are some 275 million tobacco consumers in India and the Indian government has been proactively seeking to control all forms of tobacco consumption in the country.

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November 23, 2014

International Business Provides Moderate Positives in Japan Tobacco Interim Results

Shane_MacGuillAnalyst Insight by Shane Mac Guill - Senior Tobacco Analyst

In the context of elevated levels of domestic competition and contractions in some of its major international markets, Japan Tobacco’s results for the quarter and year up to September 2014, released on the 30th of October were broadly positive albeit in so far as significant volume decline can ever be so described. The results clearly indicate the impact of excise increases in Japan, the company’s reliance on Russia and the trend to lower value products in many markets, also referenced by both BAT and Imperial in recent results.

Domestic struggles 

It is testament to the continuing decline in importance to the company of its domestic market that a set of group results, of which a 10% volume decline in Japan formed a part, can still be characterised as positive. An overarching industry contraction in Japan prompted by the April 2014 excise hike and a tough competitive environment in which JT is having to graft for every basis point of share contributed to a 10% sales volume decline between April and September 2014. Difficult pricing meant that the company had to rely on cost reduction to marginally mitigate volume loss to just over 7% operating profit decline.

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November 22, 2014

Heat-not-Burn Launches Open a New Front for the Future of Tobacco

Shane_MacGuillAnalyst Insight by Shane Mac Guill - Senior Tobacco Analyst

One of the central plotlines for the tobacco industry in 2015 will be the evolution of large manufacturer responses to the steadily increasing prevalence of e-cigarettes and their efforts to wrestle back control of the future incarnation of the cigarette. This week had the feeling of a watershed moment in that ongoing narrative as the potential silver bullet for tobacco manufacturers, heat-not-burn technology, took a further step into the minds and mouths of consumers with major announcements from Philip Morris International on its iQOS platform and Reynolds American on the launch of a specific heat-not-burn brand, Revo.

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Recent Posts

What does the Plain Pack Ruling mean for the UK and Irish Tobacco Markets?

Greece Could Raise A Billion Euro A Year If It Eliminates the Illicit Cigarette Trade

The Rising Power of Female Consumers

Estimating Category Leaders in FMCG Industries

Cuba: Key Market of the Future

Diplomatic Normalisation Promises Cuban Evolution for US Cigar Market

Assessing the Illicit Trade in Cigarettes and Foreseeing One in Nicotine Liquid

India Planning Outright Ban on E-Cigarette Products

International Business Provides Moderate Positives in Japan Tobacco Interim Results

Heat-not-Burn Launches Open a New Front for the Future of Tobacco