Latest Cigarette Market Trends in Review

People use tobacco to chew, snuff or smoke. Of course smoking is the most widespread way. Cigars, cigarillos, smoking pipes and - yep – cigarettes. Over 80 percent of all tobacco grown in the world is used to produce cigarettes.

Prior to 1990 the demand for cigarettes all over the world was constantly increasing. Smoking was popular, people didn't bother about potential health problems and advertising made everything it could (and it could do a lot in fact) to get more and more people involved in smoking. But in 1990s the growth ceased. In the USA and Western Europe cigarette sales started diminishing. Growing health concerns and massive antismoking campaigns launched by governments proved to be quite a problem for the tobacco lobby. Governments can’t just ban smoking for this would lead to both public disorder and huge budget losses. Instead they are trying to convince to quit smoking as many people as possible.

Another big problem for tobacco companies is litigation. It is the biggest challenge for them in the USA where people consider courts to be the easiest solution of any case. Thousands of lawsuits are now on air where international tobacco giants act as defendants.

Things are not too much a disaster for tobacco companies though. While sales in the USA and Western Europe move down, in the Eastern Europe and Asia sales volume are booming. Global cigarette manufacturers make nice profits, as they are able to grab significant market shares in the markets where they could not represent their products before. When it became possible for such “big guys” as JTI, Philip Morris, Reemstma etc. to enter the former USSR and Asia and other actively smoking markets they simply acquired local tobacco industry leaders and started offering the product mix of already popular authentic cigarettes and their own internationally renowned brands.

So the first trend is obvious – tobacco companies expand their influence onto the new markets to keep their profits alive and kicking. A little bit underdeveloped countries make up the best choice for such strategy - strong social antismoking tendencies are far in the future for them. But this strategy is only available to large cigarette businesses and what about smaller companies and brands? Well, this is another tendency. The global market for cigarettes is shared by a few large suppliers and their number rapidly diminishes. Big companies purchase smaller ones as it is impossible for those to survive in modern conditions. Therefore consolidation has become the obvious feature of the tobacco industry lately.

Diversification is just another remarkable trend. Each global cigarette manufacturer regularly increases its brands portfolio, aiming to be represented in all market segments, from low-margin to premium niches. Premium and highly-priced brands are very profitable and tobacco giants would definitely prefer concentrating on them, but to reduce risks connected with economic crisis leading to slowdowns in consumption they produce cheap and generic cigarettes as well.
Women are now the most important target for the tobacco industry marketers. They smoke significantly less than men do, so by increasing the number of smoking women cigarette manufacturers increase their share and profits. Women are offered to smoke cigarettes designed specifically to cater to their image needs (long and slim) and tobacco advertising is there to claim that smoking symbolizes independence and liberation of women’s rights. While in America and Europe these arguments can be hardly considered effective, in Asia and some Eastern European country they have proved to be a real success – women smoking volumes there are constantly increasing.

Smoking has already become one of the most important issues of concern for many countries. Health and production activity problems prove to have a very significant impact on the prosperity. Losses from smoking are estimated to exceed the profits budgets can get from taxes. Now governments invest billions to fight the industry their predecessors have allowed to grow in exchange to those very billions.





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