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Tobacco in Canada

Canada tobacco market: Healthy lifestyles continued to impact overall tobacco consumption

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2014-01-21 22:39:01 - Tobacco in Canada - a new market research report on

Smoking prevalence in Canada remained low in 2012, as ageing consumers and growing interest in healthier lifestyles continued to impact the overall tobacco consumption. According to the latest results from the Canadian Tobacco Use Monitoring Survey (CTUMS) in 2011, 17% of the Canadian population aged 15 years and over were current smokers, recording a significant decrease from 2001 (25%), when the Federal Tobacco Control Strategy (FTCS) was first launched. However, as government crackdown on illegal tobacco continues, it supports the migration of those who still smoke towards legal retail and thereby supports positive trend in sales in largest category – cigarettes. Growth nonetheless was quite modest in volume terms in 2012.

Canada saw a rapid rise in the marketing and sale



of electronic cigarettes, or e-cigarettes, over the last year, with brands such as Vapur emerging on store shelves in colourful packs and flavours. Given that there are no production, marketing or sales restrictions for e-cigarettes, manufacturers and retailers enjoy a degree of freedom in their business activities, freely positioning their products as a "healthier" alternative to cigarettes. This effectively raised the overall awareness and popularity of e-cigarettes amongst both existing and new smokers.

Tobacco in Canada remains highly consolidated, with three global manufacturers – Imperial Tobacco Canada, Rothmans Benson & Hedges (owned by Phillip Morris International since 2008) and JTI MacDonald Corp – accounting for the largest volume shares in 2012. Despite an increasingly difficult operating environment, exacerbated by widespread contraband activities, as well as large-scale lawsuits filed by provincial governments, these companies maintain their presence in the tobacco market by more actively engaging in communities and supporting various charity initiatives.

Premium tobacco such as chewing tobacco gained significant popularity amongst smokers in the last year, as consumers sought new and enhanced smoking experiences. Given its strong brand loyalty and high retail price, premium tobacco remained a key area of focus for retailers such as convenience stores, which wished to further boost their tobacco sales. Through informed recommendations to their regular customers, retailers continued to drive overall retail sales of premium tobacco.

Retail sales of tobacco in Canada are likely to continue to weaken over the forecast period in volume terms as overall consumption declines, driven by the ageing population and the trend toward healthier lifestyles. Additionally, government actions with respect to categories seen as too appealing to younger demographic, such as flavoured cigarillos, will impact unfavourably availability and sales of such products. At the same time, price increases as well as choice of premium products in categories like cigars will help to maintain positive dollar growth, albeit very modest, over the forecast period.

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Mike King
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