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
Cigarette volume sales continue to fall
Volume sales of cigarettes continued their downward trend in 2005. Spurred by high prices, health concerns and an increasingly negative public attitude towards smoking, people quit smoking in greater numbers, while restrictions on advertising continued to impede manufacturers' ability to attract new smokers.
Deep discounters still a factor
Escalating cigarette prices, caused by the Master Settlement Agreement and higher state excise taxes, provided an opportunity for deep discounters to supply economy cigarettes to consumers fed up with paying more for cigarettes.
In a declining market, the impact of these deep discounters was felt almost immediately, and economy brands quickly grabbed market share. By 2005, the main manufacturers had successfully implemented a combination of price cuts and more advertising for their premium brands, allowing them to regain much of their lost market share. That said, economy cigarettes still remain a threat, forcing manufacturers to monitor the price gap closely between their brands and discount competitors.
Speciality cigarettes and PREPs
Confronted with a highly competitive market with limited room for advertising or product innovation, many cigarette manufacturers have turned to premium positioning to differentiate their brands and add value. Brands such as Natural American Spirit and Nat Sherman promise a more luxurious, higher quality smoking experience, offering a range of different blends combined with more daring packaging and often significantly higher prices. Along with menthol and flavoured products, they represent one of the sector' s few growth areas.
By contrast, potentially reduced exposure products (PREPs) have fared poorly. Using a process that heats tobacco rather than burning it, PREPs are claimed to produce less second-hand smoke and tar. Consumers have been less than receptive, however, while manufacturers remain highly restricted in the types of statements they can make regarding PREPs. For now, the technology remains confined to a select group of brands, such as Reynolds American' s Eclipse, and PREPs, overall share of the market is minimal.
State governments go on the offensive against on-line cigarette sales
One of the key consequences of ever-rising cigarette prices has been the proliferation of Internet cigarette retailers. Generally operating in areas with relatively low or no state excise taxes, such as tobacco-producing states or Native American reservations, which are exempt from state taxes, on-line retailers have proven popular with consumers increasingly willing to trade convenience for lower prices. While consumers are still liable for paying sales tax on cigarettes purchased over the Internet, many do not. In addition, some Internet retailers have taken advantage of the lack of government oversight to sell counterfeit or smuggled cigarettes at low prices. As a result of the growing concerns over lost tax revenues and the proliferation of smuggled products, 2005 saw legislation limiting sales through sites, with co-operation from Philip Morris, the country' s major credit card companies as well as shipping firms UPS and DHL.
More Americans rolling their own
Long a major factor in Northern Europe, the US RYO/MYO segment showed strong growth in 2005. High packaged cigarette prices have led many consumers to RYO/MYO tobacco, which is often significantly cheaper on a per-stick basis, while a number of firms have begun to market their products as more flavourful, higher quality alternatives to mass-produced cigarettes.
Table of Contents
- EXECUTIVE SUMMARY
- CIGARETTE VOLUME SALES CONTINUE TO FALL
- DEEP DISCOUNTERS STILL A FACTOR
- SPECIALITY CIGARETTES AND PREPS
- STATE GOVERNMENTS GO ON THE OFFENSIVE AGAINST ON-LINE
- CIGARETTE SALES
- MORE AMERICANS ROLLING THEIR OWN
- KEY TRENDS AND IMPACT ASSESSMENT
- SMOKING POPULATION
- Outlook
- Impact
- DEATH BY CAUSE
- Death rates fall as smokers become scarce
- Outlook
- Impact
- LEGISLATION
- Overview/FCTC ratification
- Outlook
- Impact
- STATE GOVERNMENTS PUT INTERNET RETAILERS OUT OF BUSINESS
- Outlook
- Impact
- THE ONGOING DEBATE REGARDING FDA REGULATION
- Outlook
- Impact
- TAR
- Outlook
- Impact
- HEALTH WARNINGS
- Outlook
- Impact
- DUTY-PAID PACKET MARKS
- ADVERTISING AND SPONSORSHIP
- Outlook
- Impact
- SMOKING IN PUBLIC PLACES
- Outlook
- Impact
- LITIGATION
- TAXATION AND DUTY LEVIES
- Outlook
- Impact
- Table 1 Taxation and Duty Levies 2001-2005
- CONTRABAND (CIGARETTES)
- Outlook
- Impact
- PRODUCTION/IMPORTS/EXPORTS
- Table 2 Trade Statistics: Cigarettes 2001-2005
- THE ROLE AND EFFECT OF CANNABIS/MARIJUANA CIGARETTES: PRICE BANDS
- Outlook
- Impact
- CIGARETTES: FILTER SPLITS
- Menthol/standard
- Filter/non-filter
- Carbon/standard filter
- Filter length
- CIGARETTES: PACK SPLITS
- Pack size
- Pack type
- SMOKELESS TOBACCO STILL A MAJOR FACTOR IN US MARKET
- Outlook
- Impact
- SKYROCKETING PRICES CREATE DEMAND FOR HIGH-QUALITY TOBACCO PRODUCTS
- Outlook
- Impact
- MARKET INDICATORS
- Table 3 Number of Smokers by Gender 2000-2005
- Table 4 Deaths by Diseases of the Respiratory System 2000-2005
- Table 5 Deaths from Heart Disease 2000-2005
- Table 6 Deaths from Lung Cancer 2000-2005
- Table 7 Contraband Cigarettes Penetration Estimate 2000-2005
- MARKET DATA
- Table 8 Retail Sales of Tobacco by Sector: Value 2000-2005
- Table 9 Retail Sales of Tobacco by Sector: Volume 2000-2005
- Table 10 Retail Sales of Tobacco by Sector: % Value Growth 2000-2005
- Table 11 Retail Sales of Tobacco by Sector: % Volume Growth 2000-2005
- Table 12 Retail Sales of Cigarettes by Distribution Format: % Analysis 2000/2005
- Table 13 Forecast Retail Sales of Tobacco by Sector: Volume 2005-2010
- Table 14 Forecast Retail Sales of Tobacco by Sector: Value 2005-2010
- Table 15 Forecast Retail Sales of Tobacco by Sector: % Volume Growth 2005-2010
- Table 16 Forecast Retail Sales of Tobacco by Sector: % Value Growth 2005-2010
- DEFINITIONS
