Philip Morris International, the world’s leading international tobacco company outside of the U.S. and China, recently presented at the Morgan Stanley Global Consumer & Retail Conference in New York and provided more optimistic estimates of the global cigarette industry volume trends.
Over the next five years, PMI expects cigarette industry volume (outside the U.S.) to increase up to 1.3% a year, which is an improved outlook compared to previous forecasts.
Philip Morris International competes with British American Tobacco, Japan Tobacco and Imperial Tobacco Group plc in its various geographical segments.
Asian Smokers Helping Lift Volumes
A major part of the global cigarette market volume growth will come from the emerging Asian markets like China, Indonesia and Philippines. The industry volume in Indonesia (~25% of Asian market) has been growing with a CAGR of 3-4%, along with the Philippines (~10% of Asian market), expanding at 2%.
In Europe, cigarette sales are expected to stabilize in the traditionally strong tobacco markets like Italy and France over the next few years with a CAGR of 0-1%.
Among its international markets, PMI expects to have significant market share gains in Japan, Indonesia, Philippines, South Korea and Vietnam. In Japan, it hopes to end 2011 with a share of about 28.5% expecting good retention levels, in the aftermath of earthquake and tsunami in Japan and competitor’s resulting supply disruptions.
With the PMI-Fortune merger in Philippines, it already controls 90% market share and its Korean shipment volumes have grown by 100% between 2006-2010 with doubling of market share (to 17% in 2010). With 30% market share in Indonesia and its recent tie-up with Vietnam National Tobacco Corporation (Vinataba), a large part of PMI’s market share expansion will surely come from Asia.
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