Annual report 2004 (English) - PDF 3546K - Imperial Tobacco

Benchmarks
A world market trending toward
growth in value
The global cigar market, estimated at roughly
15 billion units, is highly concentrated in geographic
terms. More than 96% of all sales are recorded
in Western Europe (Germany, France, Spain, the
United Kingdom) and the United States, which
account respectively for 47% and 46% of the market.
Since the middle of the 1990s, these markets have
registered slow volume growth and higher revenue
growth, except in the United Kingdom which is
weighed on by very steep taxes and retail prices.
In the cigar market – which ranges from machinemade,
homogenized-wrapper units weighing less
than one gram to hand-made, 100%-natural cigars
weighing in at 18 grams – the number of units sold
is not a very pertinent indicator, and overall market
trends are therefore analyzed more cogently in terms
of value. A comparison of the top-of-the-line premium,
hand-rolled cigar segment and the machine-rolled,
mass-market segment shows a large gap between
sales volumes and corresponding revenues.
Worldwide cigar sales by segment
Volume Value
Premium 3% 28%
Mass Market 97% 72%
In Europe, small cigars – the Minis and cigarillos
– are driving growth in almost all markets. It should
be noted that certain countries such as Italy, Greece
and Portugal, which are strong in terms of cigarette
sales but less so for cigar consumption, have been
growing sharply for several years.
While growth in mature markets – the United States
and Western Europe – is tending to slow down, other
countries where cigar consumption is currently low
are gradually developing into full-fl edged markets.
Worldwide cigar sales
2004 (estimated)
Western
Europe
47%
Taxation
7%
Other countries
46%
North America
United States
The U.S. tax structure differs widely from that in
France and Spain. First of all, the market is not
regulated, and prices are therefore not offi cially
established. Secondly, both the federal government and
the individual states set taxes on cigars. The excise tax
rate varies from state to state, while federal taxes vary
according to the weight of the cigar: for large cigars
(over three pounds for 1,000 units or over 1.36 grams
per cigar), they represent 20.7% of the sales price
to the distributor, with a maximum tax of $48.75 per
thousand units. For small cigars, under 1.36 grams,
taxes amount to $1.828 per thousand units.
Spain
Cigar taxes remained unchanged in 2004. The excise
tax was kept at 12.5% of the retail price.
France
The 2004 law on social security fi nancing set new
rates for consumer taxes on cigars, resulting in an
increase from 20% to 27.57%. The minimum tax was
also modifi ed, rising from 55 to 89 per 1,000 units.
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