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Tobacco in Taiwan
Euromonitor International, Feb 2008, Pages: 37
Euromonitors Tobacco in Taiwan 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
Cigarettes Dominate Tobacco
Taiwan's tobacco market continues to be concentrated almost exclusively on cigarettes. Despite a more mass-market approach to push demand for cigars, especially cigarillos, cigars continued to remain underdeveloped in 2006. In comparison, volume consumption within cigarettes is very mature.
Cigarette Value Growth Surpasses Volume Growth Due to Price Increases
In 2005, the Taiwanese government passed a law increasing the Health and Welfare Tax from NT$5 per pack to NT$10 per pack. The tax is added directly at the time of purchase, and took effect in February 2006. The implementation had little impact upon overall cigarette sales, either in terms of volume sales or brand share distribution.
The pressure of increased prices, combined with Taiwan's economic downturn, forced many multinationals to apply a second round of cigarette price increases in the second half of 2006. Despite cigarettes in Taiwan continuing to be relatively cheap when compared with many other developed countries around the world, regardless of price band, the price increases led to more demand for economy brands.
Price Increases Fuel Economy Trend
Overall, economy brands were the best performing in 2006. Pall Mall, West, Winston and Boss all benefited from the trend. The biggest winner in 2006, however, was Taiwan Tobacco & Liquor Corp. With a combination of stronger branding for its leading brands and a move by consumers to switch back to economy brands, the company saw its share rise. For the first year since Taiwan's WTO entry in 2002, Taiwan Tobacco & Liquor Corp achieved positive annual growth.
Name Change for Leading Brand
Taiwan Tobacco & Liquor Corp repositioned Long Life Gentle in 2006 to become known simply as Gentle. The change effectively reduced Long Life's brand share. The change in brand name was smooth, and the impact positive. By the end of 2006, Gentle had become the third biggest brand in cigarettes in volume terms.
Demand Expected to Remain Strong
Despite increasing health awareness and anticipated tougher laws on smoke-free zones, demand for cigarettes is likely to remain steady to the end of 2011. In the short term, government and company-initiated price increases will be unlikely. Gentle is expected to continue to experience strong growth. Brand competition between immediate rivals, such as Mild Seven and Gentle, and Davidoff and Dunhill, will become the key focus for most players. The forecast improvement in the Taiwanese economy will help stimulate demand for premium brands.
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