Russian Cigarette Market Research

CIGARETTE MARKET 2008

RUSSIA

ALLIANCE MAJOR

SOUTH FEDERAL DISTRICT

research by

ALLIANCE ALLIANCE MAJORMAJOR

ALLIANCE MAJORMARKET RESEARCH COMPANY

SINCE 1994ROSTOV-ON-DON

SOUTH FD of RUSSIA

www.allianc.rualliancm@aaanet.ru

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GENERAL MARKET

PERFORMANCERUSSIA

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CONSUMER BASE*

MALE

FEMALE31%31%

6565%%MALE & FEMALE

46%46%

* data of Rospotrebnadzor, early 2008

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early start of consumption*

80% of men and 50% of women

started to smoke before they were 18

* data of Rospotrebnadzor, early 2008

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RUSSIAN CIGARETTE MARKET

MATURE growing in value faster than in

volume

SATURATED showing distinct overproduction

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KEY MARKET TRENDS

2008

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SLOW-DOWN of INCOME GROWTHdriven by global financial crisis

- slower uptrade (young consumers) or even downtrade (elder consumers)

- reducing consumption frequency/volume

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WHO FCTC accessioned by Russia in 2008

- heavier control over advertising and sales

- higher excises

- training of anti-smoking public opinion

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HEALTH & WELLNESS getting increasingly popular in Russia

- increasingly high popularity of super light offerings

especially among young female consumers

- amplified impact of anti-tobacco social programs

- alleviating of smoking takeup influence factors such as peer pressure, parental smoking and advertising

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HOWEVER, IMPORTANT PSYCHOLOGICAL ASPECTS of

SMOKING- anti-stress

- indulging

make it a lasting habit hard to quit

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CONSUMER PREFERENCES

in South Federal Districtof Russia

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THE REVIEW IS BASED ON

PURCHASE REGISTER*

wave 1held in MARCH 2008

covered CONVENIENCE RETAIL(kiosks, independent stores, etc)

wave 2held in AUGUST 2008

covered RETAIL CHAINS(supermarkets)

* representative sample; details on sample size, geography and register methodology available on request

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male59% female

41%

GENDER / AGE*

0%

20%

40%

60%

80%

100%16

-20

21-2

5

26-3

0

31-3

5

36-4

0

41-4

5

46-5

0

51-5

5

56-6

0

61-6

5

66-7

0

71-7

5

over

75

age groups

male female

* total sample wave 1; deviations in wave 2 insignificant

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AGE GROUPS*

* total sample wave 1; deviations in wave 2 insignificant

0% 3% 6% 9% 12% 15%

over 75

71-75

66-70

61-65

56-60

51-55

46-50

41-45

36-40

31-35

26-30

21-25

16-20

age

grou

ps

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CIGARETTE TYPES*

* total sample wave 1; deviations in wave 2 insignificant

0%

20%

40%

60%

80%

100%16

-20

21-2

5

26-3

0

31-3

5

36-4

0

41-4

5

46-5

0

51-5

5

56-6

0

61-6

5

66-7

0

71-7

5

over

75

age groups

super lights lights full flavor

lights26%

super lights46%

full flavor28%

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CIGARETTE TYPES*

* wave 1; deviations in wave 2 insignificant

male smokers

full flavor33%

super lights38%

lights29%

female smokers

lights22%

super lights56%

full flavor22%

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PRICE CATEGORIES

convenience retail

above premium

22%

value19%

medium32%

low filter5%

non filter2%

premium20%

supermarket chains

value10%

above premium

33%

premium20%

non filter0,4%

low filter2%

medium35%

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PRICE CATEGORIES*

0% 20% 40% 60% 80% 100%

16-20

21-25

26-30

31-35

36-40

41-45

46-50

51-55

56-60

61-65

66-70

71-75

over 75

age

grou

ps

non filter low filtervalue mediumpremium above premium

* total sample wave 1; deviations in wave 2 mainly relate to

value and super premium segments however general trend is the same

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KEY OPERATORS*

KT&G1%

IT/ Reemtsma3%

Donskoj Tabak5%

BAT28%

Gallaher/ JTI12%

JTI28%

Philip Morris31%

* total sample wave 2; deviations in wave 1 relate to larger shares of Gallaher and Donskoj Tabak with correspondingly smaller shares of Philip Morris, JTI and BAT

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12%

8%6% 6% 6% 5% 5% 5%

3% 3% 2% 2% 2% 2% 2% 1% 1%

9%

21%

0%

5%

10%

15%

20%

25%

Win

ston

Kent

Parl

iam

ent

Mar

lbor

oVo

gue

Ches

terfi

eld

Virg

inia

Pall

Mal

lBo

ndAl

lianc

eGl

amou

rDo

nsko

j Tab

akM

urat

ti LD LMZo

lota

ja J

ava

21 V

ekRu

sski

j Stil

othe

r (17

bra

nds)

KEY BRANDS*

* total sample wave 2; deviations in wave 1 relate to smaller shares of above premium, premium and some medium brands (mainly Winston) with respectively larger shares of value, low filter and most of medium brands

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CHANGE OF CONSUMPTION PATTERN

earlier smoking startup;even gender distribution of

young consumer base (under 30) while in senior age groups male smokers increasingly dominate;

higher popularity of super light and light cigarettes of above premium, premium and medium price categories among young consumers (under 40).

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please contact ALLIANCE MAJOR

atalliancm@aaanet.ru

www.allianc.ru

CREDITSall wonderful pictures are taken from

Flickr.com great thanks to the artists and their

models

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