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Tobacco in Malaysia
Euromonitor International, Feb 2008, Pages: 40
Euromonitors Tobacco in Malaysia report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data (2001-2006), allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new legislative, distribution or pricing issues. Forecasts to 2011 illustrate how the market is set to change.
Product coverage includes: cigarettes, cigars and smoking tobacco.
Data coverage: market sizes (historic and forecasts), company shares and brand shares.
Why buy this report?
- Get a detailed picture of the tobacco industry;
- Pinpoint growth sectors and identify factors driving change;
- Understand the competitive environment, the market’s major players and leading brands;
- Use five-year forecasts to assess how the market is predicted to develop.
Executive summary
Number of smoking population increases
The smoking population in Malaysia continued to increase in 2007, albeit at a slower rate because of the slightly decreasing number of smokers. The increase in the smoking population was mainly due to the young. Approximately 480,000 people, or 8% of an estimated six million smokers in Malaysia were female. From a social standpoint, the prevalence of young and young female smokers is expected to increase because the high smoking prevalence makes smoking acceptable and almost akin to a norm in Malaysia.
Illicit trade cigarettes constitutes an estimated 20% of total retail volume
As the government imposed taxes and increased the prices of cigarettes, the demand for counterfeit cigarettes in Malaysia also increased. In 2006, illicit trade cigarettes comprised of one fifth of the total retail volume. The government is currently undertaking stricter measures against contraband cigarettes, and higher fines are imposed on smokers that smoke illegal trade cigarettes in Malaysia. Despite this, the consumption of contraband cigarettes is expected to continue with the perceived weak enforcements of these measures by the government.
Economy priced products face threat from cheaper cigarettes
An additional increasing trend was the easy access to purchasing loose cigarettes and contraband at a lower price than economy products. A pack of 20 cigarettes that retailed for RM7.40 (US$2.1, €1.8), could sell for as little as RM3.00 (US$0.86, €0.71). This was also due to the fact that in Malaysia a large proportion of cigarettes are traditionally sold through street vendors and privately owned restaurants at half the price as in large retailers. Cheaper cigarettes that dominated in Malaysian were Saat, Promax and Fisher, selling for as little as RM1.50. As a result, value for money cigarettes, such as Pall Mall, faced a huge threat from emerging fake and cheap cigarettes.
Demand for RYO increases in tandem with price hike of cigarettes
The government raises taxes annually on cigarettes to curb smoking in line with a World Bank report stating that purchases could decrease by approximately 8% if cigarette prices are increased by 10%. However, with such increases in the retail price of cigarettes, consumers would turn to cheaper alternatives such as RYO. Retail sales of RYO are expected to increase, and hence boost sales of tobacco products over the forecast period.
Small local manufacturers pose a great threat to top three manufacturers
The top three kings of cigarettes manufacturers in Malaysia are facing hard times, as there have been threats from small local manufacturers of cigarettes. Small local cigarettes manufacturers tend to cater to the needs of the local demographic in Malaysia and are very competitive in price. Cheaper cigarettes are produced to cater for the demand of smokers with lower income, as these constitute the smoking population in Malaysia.
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