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98 posts categorized "Tobacco"

August 13, 2014

5 Key Findings in the Tobacco Market

Euromonitor International recently released new data for our Passport: Tobacco research database. Watch the video to find out five key findings we uncovered in our research.

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July 20, 2014

Imperial Propelled to Top of E-cigarettes Tree With Surprise Acquisition of blu in Reynolds/Lorillard Divesture

Zora MilenkovicAnalyst Insight by Zora Milenkovic - Head of Tobacco Research

It’s not often that the tobacco industry is caught on the hop, especially with a deal that’s been on the radar for the better part of half a year, but it was gasps all around on the 15th July when it was announced that the expected Reynolds American (RAI)/Lorillard (LO) merger would result in Imperial Tobacco (IMP) acquiring not only the cigarettes brands Winston, KOOL, Salem, Maverick, but also LO’s leading e-cigarettes brand blu, which the industry assumed was part of LO’s attraction for RAI in the first place. The acquisitions propel IMP from bit-player on the US cigarettes market to number three player and, more unexpectedly, from litigious outsider in the e-cigarettes market to number one player. And not number one player in any old market, but in the world’s largest e-cigarettes market, worth US$1.7 billion in 2014. What does this mean for IMP and for the vapour industry? Who are now the main tobacco players in this US$6billion global market and what are their vapour brands?

TOBACCO PLAYERS AND THEIR VAPOUR BRANDS 580 resized.png

 

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July 14, 2014

The Five Key Reasons Why the Reynolds/Lorillard Deal Is Taking Shape

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

On Friday 11th July, the US’s second-largest tobacco company, Reynolds American (RAI) confirmed that it was in advanced negotiations with Lorillard (LO), the third-largest, for its acquisition. Any deal, facilitated by the increased stability in litigation facing US tobacco companies, is expected to be worth in the region of US$60 billion and is also likely to involve Imperial Tobacco Plc purchasing a congeries of tail brands from RAI (or perhaps even both companies) to help satisfy any anti-competition concerns on the part of the Federal Trade Commission who will have to approve the merger.

While there are inevitable question marks surrounding the deal (amongst which, the precise extent of economies realisable from the merger, the value for Imperial in its part of the bargain and the weighting being put on Lorillard's e-cigarette brand, blu) it is, in general terms, one which is likely to be beneficial to all parties, as a result of the following:

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June 27, 2014

Smoking Ban in Chile Reduces Cigarette Consumption

 

In 2013, Chile's legislative body prohibited smoking in all enclosed public places such as bars, restaurants and stadiums. The tobacco market in Chile is enormous, with smokers in the country lighting up 8 times a day on average, and the ban has had a huge effect on the market, reducing consumption of cigarettes in the country by 7 percent from 2012 to 2013. The Chilean government has also heavily taxed cigarettes and passed a law outlawing additives that may increase addiction with the purpose of reducing the amount of money spent on health care. In response to these taxes, tobacco companies are releasing new economy and basic brands of cigarettes.

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Prohibición de fumar en Chile reduce consumo de cigarrillos

 

En 2013, el órgano legislativo de Chile prohibió fumar en todos los lugares públicos cerrados, tal como bares, restaurantes y estadios. El mercado de tabaco en Chile es enorme, con fumadores que encienden en promedio 8 cigarrillos al día. La prohibición ha tenido un enorme efecto en el mercado, reduciendo el consumo de cigarrillos en el país un 7 por ciento desde 2012 a 2013. Con el fin de reducir la cantidad de dinero que se gasta en atención sanitaria, el gobierno de Chile también ha gravado los cigarrillos y aprobado una ley que prohíbe los aditivos que pueden aumentar la adicción. En respuesta a estos impuestos, las empresas tabacaleras están lanzando nuevas marcas económicas y básicas de cigarrillos.

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June 26, 2014

Hyper-activity in E- Cigarettes But Are We Heading East...Or West?

Don2Analyst Insight by Don Headley - Contributing Analyst

In addition to the E-lites acquisition by Japan Tobacco, much is happening elsewhere in the hyperactive vapour sector including the acquisition by a US e-cigarette company VEC of UK e-cigarette company Ten Motives which, interestingly, measures its growth in terms of the number of regular cigarettes it has replaced. The scramble to get a piece of the action in a new global FMCG continues. The number of e-cigarette users in the UK has soared, from 700,000 in 2012, to 2.1m in 2014 according to Action for Smoking on Health (ASH). The US investment bank Wells Fargo has predicted that e-cigarettes could be outselling conventional cigarettes within a decade. Another finding going the rounds is that half of former smokers have tried e-cigarettes. Meanwhile industry research continues in terms of product improvement (recently the Paris-based company Smokio launched the world's first smart e-cigarette which connects to a smartphone app tracking the owner's usage) with the industry well aware that low perceptions of product quality could have severe regulatory consequences. However the next big game changer for the global vapour industry could be China.

Cigarette Replacement

ten motives 1.jpgInterest in the e-cigarette sector is demonstrated in the level of corporate activity. US Victory Electronic Cigarettes (VEC) recently acquired Ten Motives, its third UK e-cigarette company in six months for US$104m (£62m). Ten Motives sells in a number of major UK retailers including Sainsbury's, Tesco and Bargain Booze. Since its founding, Ten Motives claims to have ‘replaced’ up to 400m regular cigarettes. This statement clearly attempts to position the company in an NRT context, probably with an eye on potential legislation. Victory's previous UK acquisitions include Vapestick for US$70m and VIP for US$50m.

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May 28, 2014

New Tobacco Data - What is it Telling Us?

Zora MilenkovicAnalyst Insight by Zora Milenkovic - Head of Tobacco Research

One of the questions I increasingly find myself fielding is whether the tobacco industry is in terminal decline. The short answer is that it appears to be heading that way. Euromonitor’s latest tobacco data for 2013 shows volume declines for cigarettes of around 4% globally last year, excluding China and also shows two of the largest markets for cigarettes in the world after China – Russia and the US - losing a combined total equivalent to the entire annual sales of Bangladesh in the next five years. Is this a sign of things to come? And are e-cigarettes the answer?

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May 27, 2014

Key Findings in Tobacco for 2014

Emi_cigaretteDecline-v1.1

 

Download key highlights from Euromonitor's 2014 Tobacco Research

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Will the FDA Put A Stop to Flavoured Cigar Growth?

Don2Analyst Insight by Don Hedley - Contributing Tobacco Analyst

Euromonitor International data and recent academic surveys indicate there is currently major growth in consumption of small, flavoured cigars and cigarillos in the US (26% CAGR value growth between 2009 and 2013).  The US Food and Drug Administration banned flavours other than menthol in cigarettes in the 2009 Family Smoking Prevention and Tobacco Control Act. One key justification for this was that ‘candy’ flavours were a gateway to young people starting smoking. However, the flavours ban did not extend to cigars, given the lack of FDA oversight of the category, leading to accusations of a legislative loophole. So with the April proposal to extend FDA regulation to small cigars is the loophole likely to be closed? Perhaps, but the same comments have been made about menthol in cigarettes.

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May 26, 2014

Weak Performance in the Global Tobacco Market

The global tobacco market as a whole saw a 4 percent decline in 2013. Part of the reason for this weak performance is ‘impaired volumes’, meaning consumers are buying economy cigarettes, roll-your-own cigarettes or illicitly traded cigarettes, all cheap options that effect value sales of the market as a whole. E-cigarettes on the rise in many countries, but many tobacco companies aren’t ready to pin their hopes on a product that may not be the answer to lagging sales.

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Recent Posts

5 Key Findings in the Tobacco Market

Imperial Propelled to Top of E-cigarettes Tree With Surprise Acquisition of blu in Reynolds/Lorillard Divesture

The Five Key Reasons Why the Reynolds/Lorillard Deal Is Taking Shape

Smoking Ban in Chile Reduces Cigarette Consumption

Prohibición de fumar en Chile reduce consumo de cigarrillos

Hyper-activity in E- Cigarettes But Are We Heading East...Or West?

New Tobacco Data - What is it Telling Us?

Key Findings in Tobacco for 2014

Will the FDA Put A Stop to Flavoured Cigar Growth?

Weak Performance in the Global Tobacco Market