World’s tobacco firms are on a roll even as China market shrinks
Tobacco industry is bucking the declining consumption trend, although experts expect China to lead a new wave of volume decline as Beijing steps up its anti-smoking campaign amid increasing health concerns
Against the overall consumption slump, there are signs that the world’s tobacco giants stand a chance of returning to the heyday, after delivering a “stronger performance” in 2016, a recent study showed.
The study of the top 50 global consumer companies by OC&C Strategy Consultants found that active industry consolidation and a continued drive to increase margins have boosted profitability.
As such, global drives to discourage smoking and curb cigarette sales – from advertising bans to mandatory warnings on cigarette packaging featuring rotting lungs – have been inadequate to dent businesses of the big players like Philip Morris and British American.
“Tobacco prices have risen steeply in developed markets in the past 12 months,” said Will Hayllar, partner with OC&C Strategy Consultants.
“A continued drive to increase margins through pricing and cost cutting has boosted profitability.”
The industry sells 5.6 trillion cigarettes each year to the world’s one billion smokers, or triple the size of the US population.
