Cigarette and Tobacco Product Manufacturing in Australia Industry Market Research Report Now Updated by IBISWorld

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IBISWorld Market Research

Demand for cigarettes has declined over the past five years due to rising health concerns, frequent anti-smoking campaigns, increasing regulation and higher excise taxes

Melbourne, Australia (PRWEB) July 27, 2014

Although Cigarette and Tobacco Product Manufacturing in Australia is restricted to two companies, heavy government regulation results in extremely fierce competition. According to IBISWorld industry analyst Spencer Little, “Demand for cigarettes has declined over the past five years due to rising health concerns, frequent anti-smoking campaigns, increasing regulation and higher excise taxes.” As a result, industry revenue is estimated to fall at a compound annual 0.8% over the five years through 2014-15. Revenue is forecast to drop by 3.8% in 2014-15 to reach $1.8 billion. Smoking tobacco has been proven to cause a range of health issues such as lung cancer, throat cancer and respiratory diseases. Industry products therefore cannot be advertised and must be sold in plain packaging that includes health warnings. Excise taxes, which are excluded from the industry's cost structure, have risen over the past five years. However, profitability has increased over this period, as manufacturers have been able to increase cigarette prices due to the relatively inelastic demand for tobacco products.

Over the next five years, the industry is anticipated to continue struggling. Tobacco product manufacturers are expected to continue to face rising government regulation. “Further declines in the national smoking rate will also reduce the size of the market,” says Little. As a result, prices of cigarettes and other tobacco products are projected to rise, in order to offset falling demand. The popularity of unpackaged tobacco and roll-your-own cigarettes is anticipated to continue over the next five years, bolstering profit margins. Philip Morris has signalled its intention to cease domestic cigarette manufacturing by the end of 2014, which would dramatically change the industry's current structure.

The Cigarette and Tobacco Product Manufacturing industry has a very high market share concentration, as there are only two manufacturers that operate in Australia. There are more distributors that import and wholesale tobacco products, including major tobacco company Imperial Tobacco, but these firms are included in the Tobacco Product Wholesaling industry. The two companies in the industry, British American Tobacco and Philip Morris, operate globally and have manufacturing facilities in Australia. On a global level, these firms have been involved in large amounts of merger and acquisition activity over the past five years. However, the number of companies operating domestically has remained at two over this period. As a result, market share concentration has remained unchanged over the past five years.

For more information, visit IBISWorld’s Cigarette and Tobacco Product Manufacturing report in Australia industry page.

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IBISWorld industry Report Key Topics

Companies in the industry primarily manufacture tobacco products such as cigarettes, cigars, roll-your-own cigarettes and loose pipe tobacco. These products are sold to specialist tobacco wholesalers and retailers, supermarkets and convenience stores. Smokeless tobacco products such as chewing tobacco and snuff are banned in Australia and are therefore not included in the industry. Industry revenue does not include excise taxes.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.

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