Learning from Others

Euromonitor discusses tobacco throughout the world

Linda Abu-Shalback Zid, Senior Editor

CHICAGO -- In the United Kingdom, a pack of cigarettes has an average cost of $11.10; in the United States, the average is $8.50, according to London-based strategy research firm Euromonitor International.

But despite the disparity between the two prices, as well as other differences, the two are experiencing similar trends. Economy cigarettes, for example, account for 21% of usage in the U.S. and 63% in the U.K. -- but the trend is up in both countries.

Premium cigarettes account for 70% in the U.S. and 25% in the U.K., but that trend is downward in both. Also down is the trend for mid-price cigarettes, accounting for 9% in the U.S. and 12% in the U.K.

Zora Milenkovic, head of global tobacco research at Euromonitor, suggested at the NACS Show in Chicago this week that much can be learned by looking at other countries.

Companies in other countries are turning to innovations in pack size, for example, for the "premiumization" of cigarettes. While in the U.S., cigarettes are required to be delivered in packs of 20, Eastern Europe has packs of 40 in "harmonize the taxation system" efforts. When the recession hit in Spain, packs of 24 appeared.

Other innovations include pack type, superslim packs, additive-free tobacco cigarettes and filters (carbon/capsules).

Milenkovic said that for the first time, a company has even put a figure behind innovation, with British American Tobacco including in its annual report that 10% of its 2010 sales came from innovations made in the last three years.