Prices on Global Tobacco Market Will Rise According to Euromonitor International09 Feb 2012 • by Natalie Aster
The effect of price rises on cigarette volumes and the level of price elasticity of demand – the extent to which higher prices make smokers consume less – is becoming increasingly vital to the tobacco industry, as is the related concept of pricing strength and the question – how long can the industry keep increasing value sales while profits fall by persuading consumers to trade up rather than trade down?
The “Pricing in the Global Tobacco Industry: Prices Will Rise but Will Profits Follow?” by Euromonitor International analyses pricing in the global cigarette market. Comparing equivalent prices of the same brand is not the same as comparing average price paid. This is because comparing the price of a particular brand, while showing how much manufacturer prices and tax differ from market to market, does not take account of the proportion of consumers buying cheap brands and thus lowering average price paid. When sufficient consumers trade down this can even cause the average price paid for a pack of cigarettes to fall, despite the fact that manufacturer price rises and tax-driven price rises have caused the price of all brands to rise.
Pricing in the Global Tobacco Industry: Prices Will Rise but Will Profits Follow?
Published: January, 2012
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