Three tobacco manufacturers currently operate in Australia: Rothmans Holdings Ltd, WD & HO Wills Holdings Ltd and Philip Morris (Australia) Ltd. Rothmans also holds the manufacturing and distribution rights to brands owned by a fourth company, the American-based RJ Reynolds Tobacco Inc. Rothmans and Wills are listed on the Australian Stock Exchange, but are substantially owned by overseas parent companies. Philip Morris (Australia) was publicly listed prior to 1986, after which it was de-listed on becoming a wholly owned subsidiary of its parent company, the US-head-quartered Philip Morris Inc. However in November 1992, Philip Morris Inc was listed on the Australian Stock Exchange.
In common with most other developed countries, Australia represents a declining market for tobacco companies. Overall consumption of tobacco products has dwindled by 19% in the last decade,(1) and per capita consumption by 31% over the same time period(2) (see Chapter 2, Section 1 for further discussion). In early 1993 WD & HO Wills predicted a decline in overall market volume of about 2-2.5% annually over a five year period.(3) By early 1994, the rate of market decline predicted by Wills had increased to 3-5% per annum for the foreseeable future.(4) These declines in consumption mean that the companies are engaged in fierce competition for an ever diminishing market. The Australian market was worth an estimated $5.4 billion a year in retail sales in 1994.(5)
The Australian cigarette market is distinctly segmented, with brands categorised by price, style and packaging. The value for money end of the market is the major battleground, and this segment will clearly remain the most vital for the industry, as smoking has increasingly become stratified by socioeconomic levels (see Chapter 1, Section 6 and Chapter 2, Section 5). The industry recognises that this is its major market: one former executive of Wills observed that concerns about smoking are a phenomenon of the middle and upper classes: 'It is not an issue with blue-collar workers or out in the western suburbs'.(6) Other key groups in the market are young people and women.