10.6 Retail value and volume of the Australian tobacco market

Last updated: March 2021

Suggested citation: Scollo, M, Bayly, M. 10.6 Retail value and volume of the Australian tobacco market. In Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2021. Available from http://www.tobaccoinaustralia.org.au/chapter-10-tobacco-industry/10-6-retail-value-and-volume-of-the-australian-tobacco-market

 

Data on sales of tobacco products by Australian tobacco wholesalers or retailers are collected by companies specialising in the collection of sales data for commercial purposes and are available for purchase at a high cost; some researchers have been denied access to this data despite being willing to purchase it. Some of this data makes its way to companies established to provide advice to investors and other market players. This is also generally available only on subscription or by purchase from these companies. It comes with little specific information about the method of collection.

Limited  information on sales of cigarettes in Australia has also been included incidentally in reports by tobacco companies to financial regulators in Australia (the Australian Securities and Investment Commission) and (along with data concerning markets in other countries where it has subsidiary companies)  by US-based Philip Morris International Inc (in annual filings to the US Securities and Exchange Commission). 

10.6.1 Value and volume of the Australian tobacco market

Despite falling tobacco consumption and lower sales volumes of cigarettes in recent years, the value of tobacco sales has increased, due to price increases caused in part by taxation increases—see Chapter 13, Table 13.3.2. Table 10.6.1 shows the value of the Australian tobacco market in 2016 and 2017, and the volume of cigarette sales. In 2017, 14 billion cigarette sticks were sold in Australia at a value of $14.5 billion, equating to an average of $1.24 per cigarette. This represented an increase in value but decrease in volume from 2016, when the average cigarette value was $1.08.1 Other smoked tobacco products saw a substantial increase in sales value from 2016 to 2017. In Australia, cigars, cigarillos and pipe tobacco make up a very small and declining component of the total tobacco market—around 1.3% of wholesale market value at 20182 —meaning roll-your-own tobacco would account for a large majority of the 15.1% jump in sales revenue for this group of products. Cigars are typically expensive in Australia, due to low supply, high labour costs, and ‘prestige’.2

Table 10.6.1
Value and volume of retail sales of tobacco products in Australia, 2016 and 2017

Source: Euromonitor International. Tobacco in Australia. London: Euromonitor International, 2019.1 Data up to 2017 available for purchase or on subscription:  http://www.euromonitor.com/tobacco  

Data on the volume of sales of cigarettes in Australia has been included, incidentally, in Form 10-K filings by US-based company Philip Morris International Inc to the US Securities and Exchange Commission covering the years from 2016 to 2020.3-5 The quantities of cigarettes shipped (as listed in the filings) together with an estimate of changes in numbers of cigarettes sold compared with the previous year are set out in Table 10.6.1a. Note that quantities of smoking tobacco for RYO cigarettes is not included.

Table 10.6.1b
Volume of cigarette sales in Australia, 2017 to 2020 (billions)

 The total size of the Australian market for ready-made cigarettes in 2020 would have appeared to have declined substantially since 2016. Data on the Australian market is not included in filings to the US Securities and Exchange Commission prior to 2016.  The absolute size of the Australian market has never been reported in filings by Australian tobacco companies to the Australian Securities and Investment Commission, however filings lodged in April 2008,6 2010,7 20128 and 20149 included changes compared to previous year in total market volume for 2007 (-1.8%), 2009 (+0.5%), 2011 (-5.4%), 2012 (-4.4%) and 2013 (0%). Annual declines in volumes would therefore appear to be much higher between 2016 to 2020 than they were between 2007 and 2010. (Note that volumes of wholesale shipments in 2012 and 2013 would have been affected by the introduction of Australian plain packaging legislation. The 1st December 2012 deadline for implementation at retail level may have necessitated first a running down of supplies of older stock and then a building up of supplies of new stock compliant with the new legislation.10 ) No information could be located on the magnitude of changes in the size of the Australian cigarette market in the years 2008, 2010, 2014, 2015 TO 201911-13

Table 10.6.2 shows Euromonitor estimates of the volume of cigarettes sold in 2016 and 2017 in Australia by retail channel. In 2017, 7.7 billion cigarette sticks or 309 million packs of 25 cigarettes were sold in supermarkets. The volume of cigarette sales declined from 2016 to 2017 in all retail channels other than internet retailing. The small proportion of cigarette sales in vending machines declined substantially from 0.1% to 0%. Note, however, that cigarette sales in vending machines did not cease in 2017, but the volume of sales was apparently negligible.

Table 10.6.2
Volume of the Australia cigarette market, by retail channel, millions of sticks

Source:  Euromonitor International. Tobacco in Australia. London: Euromonitor International, 2019.1 Data up to 2017 available for purchase or on subscription:  http://www.euromonitor.com/tobacco

^ Categories not otherwise defined by Euromonitor.

Australian industry data on retail sales just in the grocery market show similar patterns of tobacco product value and volumes. In 2016, tobacco sales (including smoking accessories) were valued at $9.43 billion, or 15.8% of all grocery sales revenue.14 Cigarettes comprised the majority of tobacco sales (85.9%), valued at $8.10 billion. Roll-your-own tobacco made up 13.0% at $1.23 billion, followed by cigarette papers (0.4%, $41.6 million), cigars (0.3%, $31.1 million), and cigarette accessories (0.3%, $25.1 million). British American Tobacco had the largest share of the 2016 total grocery tobacco market value at $3.42 billion (36.2%), followed by Philip Morris ($2.96 billion, 31.4%) and Imperial Tobacco ($2.91 billion, 30.9%). All other tobacco importers and wholesalers made up the remaining $138.6 million (1.5%).14  

10.6.2 Sales value of cigarette and tobacco compared to other product categories from Australian supermarkets and grocers

In 2015, consumers spent $7.81 billion on cigarettes in grocery retailers—a reported increase of 6.5% on the previous year.15 In previous years, cigarettes ranked second only to dairy produce in sales value, but in 2015 overtook dairy produce to be the highest-revenue grocery product category ( Table 10.6.3).

Table 10.6.3
Ranking by sales value of leading product categories in Australian groceries and supermarkets, 2015

Source:  Retail World15

 

Relevant news and research

For recent news items and research on this topic, click  here. ( Last updated January 2021)

 

References  

1.   Euromonitor International. Tobacco in Australia—2016 and 2017. London: Euromonitor International, 2019. Available from: http://www.euromonitor.com/tobacco.

2.   Thomson J. IBISWorld Industry Report F3606b: Tobacco Product Wholesaling in Australia. Melbourne, Australia: IBISWorld, 2018.

3.   Philip Morris International Inc, Form 10-K filing to the United States Securities and Exchange Commission for Year ending 31 December 2017. Washington: United States Securities and Exchange Commission; 2018. Available from: https://www.sec.gov/Archives/edgar/data/1413329/000141332918000007/pm123117form10kwrapinclfsm.htm.

4.   Philip Morris International Inc, Form 10-K filing to the United States Securities and Exchange Commission for Year ending 31 December 2019. Washington: United States Securities and Exchange Commission; 2020. Available from: https://www.sec.gov/Archives/edgar/data/1413329/000141332919000007/pm123118form10kwrapinclfsm.htm.

5.   Philip Morris International Inc, Form 10-K filing to the United States Securities and Exchange Commission for Year ending 31 December 2020. Washington: United States Securities and Exchange Commission; 2021. Available from: https://www.sec.gov/ix?doc=/Archives/edgar/data/1413329/000141332921000007/pm-20201231.htm.

6.   Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2007. Document No. 024712525 Melbourne: Australian Securities and Investment Commission, 2008. Available from: https://asic.gov.au/online-services/search-asics-registers/.

7.   Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2009. Document No. 7E2855010 Melbourne: Australian Securities and Investment Commission, 2010. Available from: https://asic.gov.au/online-services/search-asics-registers/.

8.   Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2011. Document No. 7E4418537 Melbourne: Australian Securities and Investment Commission, 2012. Available from: https://asic.gov.au/online-services/search-asics-registers/.

9.   Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2013. Document No. 7E6007538 Melbourne: Australian Securities and Investment Commission, 2014. Available from: https://asic.gov.au/online-services/search-asics-registers/.

10. Cancer Council Victoria. Questions and answers on plain packaging in Australia Facts sheet no. 2: What has happened to sales of tobacco products since the introduction of legislation to standardise the packaging of tobacco products in Australia?  2016. Last update: Viewed Available from: https://www.cancervic.org.au/downloads/plainfacts/Facts_sheets/Facts_Sheet_no._2._Sales_Oct_2015.pdf.

11. Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2016. Document No. 7E7915324.Melbourne: Australian Securities and Investment Commission, 2016. Available from: https://asic.gov.au/online-services/search-asics-registers/.

12. Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2017. Document No. 8E0124525 Melbourne: Australian Securities and Investment Commission, 2018. Available from: https://asic.gov.au/online-services/search-asics-registers/.

13. Philip Morris (Australia) Limited. Copy of financial statements and reports for annual report to 31 December 2019. Document No. 7EAW04825 Melbourne: Australian Securities and Investment Commission, 2020. Available from: https://asic.gov.au/online-services/search-asics-registers/.

14. Retail World. Annual Report 2016. Retail World, 2017.

15. Retail World. Annual Report 2015. Retail World, 2016.