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Cigarettes & Tobacco Market Report 2008
Key Note Publications Ltd, Oct 2008, Pages: 95
According to the General Household Survey (GHS), established in 1972, the prevalence of smoking in the UK continues to decline. The Survey's latest figures, published in 2008, show that, in 2006, the percentage of adults in Great Britain who smoked cigarettes and hand-rolling tobacco (HRT) fell to just 22%, from 24% in 2005 and 45% in 1972. The decline reflects anti-smoking campaigns, increasing awareness of the health risks associated with smoking, increasing restrictions on where people can smoke and the rising cost of cigarettes.
The market grew by 3.3% in value terms in 2007 and increased by 9% over the 5 years from 2003 to 2007. In volume terms around 64.5 billion sticks were consumed in the UK in 2007, according to the Tobacco Manufacturers' Association with smuggled and/or cross-border shopping cigarettes accounting for 17.5 billion sticks out of this total. Overall sales volumes are in steady decline as increasing numbers of UK consumers either give up cigarettes or cut back on consumption.
Imperial Tobacco says that the cigarette market enjoyed a buoyant first half in 2007, but that it declined in the second half following the introduction of bans on smoking in public places and poor weather (which presumably deterred people from smoking outside pubs and other public areas where smoking has now been banned).
Two publicly-quoted companies, Japan Tobacco International (JT) and Imperial Tobacco, dominate the UK tobacco market with an 80% share by value. British American Tobacco (BAT) is the world's second-largest cigarette company and is increasingly focused on fast-growing developing markets rather than advanced economies where smoking is in decline. BAT has a 5% share of the UK market largely through its Rothmans brand. All three companies (Imperial Tobacco, JT and BAT) are effectively international companies selling their brands across the globe. A survey commissioned for this Report, and carried out by BMRB International's Target Group Index (TGI), confirmed that the prevalence of smoking is declining.
In 2007, 24.8% of the sample had smoked cigarettes in the previous 12 months, compared to 25.9% in 2006. Levels of smoking are highest among the 20-34 age range but prevalence then falls rapidly. Smoking prevalence is heavily skewed towards those in the lowest national social grades, suggesting that the authorities should focus more on these sectors if they wish to reduce smoking overall.
We believe that the cigarette and tobacco market in the UK will continue to increase in value terms, but that volume consumption will decline further as the prevalence of smoking remains on a downward trend. The increased value of the market will be solely due to price hikes as the Government continues to increase taxes in line with inflation. Further campaigns against smoking and more restrictions on where cigarettes can be bought and smoked are likely. This will inevitably contribute to further declines in the incidence of smoking.
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