The tobacco market - Italy

1.2 The world tobacco market

The tobacco plant is used for the production of different derivative products, consumed all over the world. There are several tobacco producing countries, among them we find China, India, Brazil, Zimbabwe, or even Indonesia. Given the great variety of producing countries, the production of the tobacco plant is very important, with several tons of product grown and sold every year.

World tobacco production over the past decade has been as follows:

World Tobacco Production World, ****-****, in billions of tonnes Source: ****

From the data presented in the graph above, it is possible to infer that world tobacco production has declined slightly over the past decade, especially from **** onward. In fact, there was a slight progression only in ****, before abruptly declining again in ****.

This reduction in production over the years is justified by the different global policies aimed at raising awareness of the risks of smoking, and then with the implementation of different policies implemented by individual countries, or international organizations such as theWHO (***), to reduce the rate of smoking citizens.

The European market

The European map above shows the smoking rates in European Union countries. The EU average is **% of smokers, of which **% are men and **% are women.

1.3 Domestic tobacco production

Domestic tobacco production over the past decade was as follows:

Tobacco production turnover Italy, ****-****, in millions of euros Source: ****

The data in the graph above show that the Italian tobacco industry production has varied greatly over the period considered: while in **** annual production was around *** million euros, in **** it sank to around ***.* million euros. However, in ****, tobacco industry production rose to just under *.* billion euros, the highest value to date.

Italy ranks first in the European manufacturing market for raw tobacco production. In fact, the country produces almost all varieties of tobacco, with the exception of oriental varieties. In fact, it produces around ** *** tons, with a **% share. Currently, tobacco farming is spread over * Italian regions from North to South, however **% of tobacco production is still mainly produced in four regions:

Campania Umbria Veneto Tuscany

Source: ****

1.4 Tobacco trade flows

In this part, the Italian trade flows generated by the tobacco market will be analyzed. The UN Comtrade code used is ****: "Tobacco, unprocessed, tobacco residues".

In ****, the value of Italian tobacco exports was $*.* billion, the value of exports of cigarettes containing tobacco on the other hand is much lower, with $*.* million USD in **** (***).

Value of exports of tobacco and manufactured tobacco substitutes Italy, ****-****, in € billion Source: ****

The graph above shows the value of tobacco exports over the last decade. It can be seen how Italy has over time acquired a prestigious position on the world market, with exports that until **** did not even reach a billion euros. The countries with which Italy exported the most in **** were:

Destination of tobacco exports Italy, ****, in % Source: ****

For imports, the same parameter was taken into consideration as for exports. In **** the value of tobacco imports reached $*.* billion, while the value of imports of cigarettes containing tobacco had a value of $*.** billion. Italian imports of cigarettes with tobacco are much higher than exports, so the domestic tobacco market is concentrated on the tobacco plant.

Value of imports of processed tobacco and tobacco substitutes Italy, ****-****, in € billion Source: ****

From the graph above, it can ...

2.1 The profile of the Italian smoker

There are **.* million smokers in Italy, representing **% of the populationin ****. [***] The latest revelations from Istat surveys allow us to create a "typical profile" of the Italian smoker. The following two graphs show the habits of Italians regarding cigarette smoking by age group. It will then be easier to draw a "typical profile" of the Italian smoker.

Smokers by age group Italy, ****, in thousands Source: ****

Number of cigarettes smoked per day by age group Italy, ****, in thousands Source: ****

The two graphs above summarize the number of smokers and the number of cigarettes smoked by age group. It can therefore be deduced that the population between the ages of **-** is the one that smokes the most, also in terms of cigarettes smoked per day. Among these, the gender distribution is as follows:

Distribution of smokers by sex Italy, ****, in % Source: ****

From the graph above, one can conclude that men tend to smoke more than women.

Thus, a "typical profile" of the Italian smoker is that of a man between ** and ** years of age.

The following map shows that the concentration of smokers is far more important in the North of the country, although regions in the Center and South (***) account for a ...

2.2 Italians' spending on tobacco

In Italy, the population in **** spent as much as *.** billion euros on tobacco product purchases (***). The geographic breakdown of spending is as follows:

The map above shows the Italian regions where tobacco spending is highest. Data are shown based on monthly expenditures per smoking inhabitant of the region. There are two regions where the expenditure is very high: Lombardy and Basilicata, while the regions with the lowest expenditure are Puglia and Friuli-Venezia-Giulia.

Trend in annual tobacco spending Italy, ****-****, in millions of euros Source: ****

The graph above shows Italians' annual spending on tobacco products, and immediately highlights the significant increase in spending from **** onwards. This sudden increase (***) is justified by a much stricter taxation for establishments selling tobacco. In fact, since ****, that annual expenditure has been above * billion euros.

2.3 Best-selling tobacco products

The products composed of tobacco present and most popular in the Italian market are:

Cigarettes The snuff The shreds Cigars Cigarettes Inhalation products

In ****, the top selling products were:

Tobacco product sales Italy, ****, in % Source: ****

The chart below shows the three most popular and best-selling products in the Italian tobacco market. From the Ministry of Health 's **** Report on Market Trends, it is interesting to note that among the products in the graph, cigarettes are the only ones to have experienced a decrease in sales from **** to ****, with a decrease of-**.*%, while from **** to **** of -*.*%.

Cut tobacco, a product used for DIY cigarettes, has increased by+*.*% between **** and ****. This type of tobacco has a price well below regular cigarettes, and is therefore a product that attracts a young clientele.

Finally, smokeless inhalation products were introduced to the market in ****, and their sales have been increasing over the past * years. In fact, over the period ****-**** their increase was +*** ***.*%, with a value in **** of *,*** euros, and of *,***,*** euros in ****.

Cigarette sales Italy, ****-****, in millions of euros Source: ****

Sales of other products containing tobacco Italy, ****-****, in millions of euros Source: ****

2.4 Very young smokers

A survey conducted in **** by GYTS on youth tobacco habits presents conclusions on the relationship of **-** year olds with products containing tobacco. On the other hand, a study carried out by HBSC is interested in the cigarette smoking of very young people (***) and on their frequency of smoking. Regarding HBSC's survey, the results are as follows:

Share of very young people who report having smoked cigarettes at least one day in the last ** days Italy, ****, in % Source: ****

From the graph above, we can see that the percentage of very young people who have already smoked a cigarette increases significantly with age, and that there is a substantial difference between the female and male share who have already tried. In fact, females have as much as *.* percentage points more than males.

Share of youth who already have smoking habits Italy, ****, in % Source: ****

From the graph above, it can be seen that again, females have a higher tendency to smoke than males, with a total share of **.*%, compared to **.*% for males. In addition, from the graph we can see that females prefer to smoke cigarettes exclusively, while boys also try electronic cigarettes. Despite the ban on the sale of products containing tobacco ...

3.1 Leading tobacco companies

The global market for distribution of products with tobacco is very uncompetitive, because there are already a few giants in the market, so it is very difficult to enter as a new player. The leading companies in the industry in **** recorded the following turnover:

Leading tobacco companies World, ****, in billions of USD Source: ****

Most of these companies invest in Italy, and rely on Italian tobacco production. To cite a few examples, in **** British American Tobacco invested ** million euros in the country, while Philip Morris International in **** invested *** million euros over a *-year period (***).

In addition, these multinationals also support Italian tobacco agriculture through agreements with the Ministry of Agriculture, Food and Forestry. The most recent agreement was concluded between the MiPAAF and Philip Morris International in ****, with planned investments of up to *** million euros, involving about **% of total Italian tobacco production. [***]

3.2 The Italian territory: cultivatable areas for tobacco

Tobacco cultivation in Italy has decreased drastically since the beginning of the millennium:

National arable area of tobacco Italy, ****-****, in thousands of ha Source: ****

The graph above shows the cultivable area in hectares on the Italian territory. From **** to ****, the country went from almost ** thousand cultivable hectares to **.* thousand hectares in ****. In fact, until a few years ago, Italy was a big grower of the tobacco plant, but the situation has slowly changed. This is due to the reduction of incentives by the European Union, and by the Italian State. This reduction in fiscal aid is justified by a desire to slow down the smoking consumption of the Italian population.

Italian companies

The number of Italian companies involved in the tobacco market has been drastically reduced in the last twenty years.

Number of tobacco companies Italy, ****-****, in whole numbers Source: ****

The graph above shows the number of tobacco producers in Italy, in **** there were less than *,***. These are very uninspiring numbers, especially considering that just ** years ago, in ****, there were more than *,***, and even ten years earlier, in ****, just under **,***. These farms are spread across very few Italian regions, in fact there are only in Veneto, Umbria, Campania, Tuscany ...

3.3 The tobacco distribution network

The Italian distribution network of products containing tobacco corresponds to the trade phase of the tobacco market. In fact, once tobacco leaves have been grown, harvested and processed, they are then marketed. The distribution of products in Italy takes place through a logistics system divided as follows:

* territorial deposits: **% coming from Tortona **% coming from Anagni **% coming from Maddaloni **% coming from Bologna **% coming from Catania *% coming from Bari *% coming from Crotone *% coming from Cagliari *** local warehouses

The goods, or rather the products containing tobacco, are stored and monitored in these warehouses. The position of the local warehouses is strategic, because it guarantees territorial proximity to the national territory. From these warehouses, the products are then directly distributed to the businesses authorized to sell them, which are secondary businesses such as tobacco shops. The distribution of tobacco products to secondary traders is the second part of the distribution chain. [***]

Secondary distribution (***) is distributed as follows throughout the country:

The following map shows the distribution of tobacco shops in Italy. It can be seen that Lombardy is the region where most businesses are concentrated.

4.1 The prices of tobacco products

In Italy every year there are ** million customers per day who purchase products containing tobacco. The products of that contain tobacco have already been mentioned during this study, in part *. The most popular are:

Cigarettes Cigars Inhalation tobacco Cigarillos Cut Tobacco

The prices charged by the market for some of these products are:

Consumer price index for tobacco products Italy, ****-****, Base ****=*** Source: ****

The graph above shows the consumer price of two products containing tobacco, cigarettes, cigars and cigarillos. In the last year, it can be seen that prices have remained very stable, especially during the year ****. For cigarettes, **** is also a year in which prices are stable and consistent with those charged in ****, while for other products, prices have been rising slightly since February.

4.2 Illicit trade in tobacco

There is an illicit traffic of cigarettes containing tobacco, this is not based on the composition of cigarettes with illicit substances, but on the origin of the product. In fact, the rules of certain countries, especially in the European Union, are much tighter and stricter than in other countries.

In Italy, in ****, there were * illicit cigarettes consumed per ***, so a consumption of *.*%. This result is quite low, in fact, Italy ranks **rd of the countries consuming illicit cigarettes in Europe.

In Italy, *.** billion illicit packets were found in ****, the origin of these packets is as follows:

Provenance of illicit cigarette packages Italy, ****, in % Source: ****

From the graph, it can be seen that the majority of illicit packets circulating in Italy come from Slovenia.

The distribution channels from where illicit cigarettes are then put into circulation are Duty Free. In fact, the Intellegit survey reveals that in ****, **.*% of illicit packs circulating in Italy came from this channel. the Italian municipalities where the most illicit packages are consumed are:

Municipalities with the highest consumption of illicit cigarettes Italy, ****, in % Source: ****

From the graph above, it can be seen that the municipalities with the highest rate are Trieste and Udine, and this can be ...

4.3 A new trend: the electronic cigarette

A study by Intellegit published in **** is interested in the evolution of electronic cigarette use. This product is relatively new, and appeared in the Italian market in ****. In fact, only * out of ** consumers have been using electronic cigarettes for more than * years.

Answers to the question: "How long have you been using electronic cigarettes? Italy, ****, in % Source: ****

From the graph above, the frequency of e-cigarette smoking is broken down. You can see that **% of Italians have been smoking e-cigarettes for less than a year.

Quitting smoking through electronic cigarette:

Contrary to popular belief, e-cigarette use does not push smokers to quit smoking. For this reason, the data regarding smokers in Part *.* is relevant to the analysis of e-cigarette demand. Among the Italian smoking population, * million people are occasional and regular e-cigarette smokers. Among these people:

E-cigarette users Italy, ****, in % Source: ****

The graph above shows electronic cigarette smokers in Italy. You can see that the majority (***) are dual smokers, meaning they smoke both regular cigarette tobacco and electronic cigarettes. From this data, we can conclude that the tobacco market is still dominant among Italian smokers.

According to the survey by Istituto Superiore Sanità, on a sample interviewed, **.*% are ex-smokers. The data collected ...

5.1 European regulation

Governments' updating of tobacco legislation aims to raise awareness of reducing their smoking consumption, protect the non-smoking population from second-hand smoking, and support cessation efforts.

The new European directive Directive **/****/EU (***), on the processing, presentation and sale of tobacco and related products, led to the issuance of Legislative Decree No. * of January **, ****.

The Directive has the following important points:

The introduction on tobacco-containing products of "combined warnings" (***), on **% of the main fronts of packages and packaging A ban on references to lifestyle benefits, or flavors/odors on the package A ban on providing information on tar, nicotine or carbon monoxide content on the label A ban on additives that make the tobacco product more "attractive" and "more harmful" The elimination of **-cigarette packs and packages of cut tobacco with less than ** g of product A ban on "characterizing flavors" for cigarettes (***) A ban on online sales of tobacco products and electronic cigarettes to consumers

Measures have also been introduced on the marketing of electronic cigarettes and products derived from them.

The Italian decree has completed the European legislation with measures aimed at the protection of minors.

5.2 The national regulatory framework

The national regulations regarding tobacco analyzed in this part concern the consumption of products containing tobacco. Thus, all products that are smoked. For this reason, the Italian framework has a tendency to protect non-smokers. This is done with the following provisions:

Law No. *** of November **, ****, regarding the prohibition of smoking in certain premises and in public transportation The Directive of the President of the Council of Ministers of December **, ****, regarding the prohibition of smoking in certain premises of the public administration or managers of public services. Subsequently, this prohibition has also been extended to public companies and private operators of public services Law * of January **, **** (***), has extended the smoking ban to all closed premises Decree of the President of the Council of Ministers of December **, ****, this regulation grants the possibility to build specific rooms reserved for smokers, with specific ventilation parameters

6.1 Actor segmentation

• Philip Morris International
• Imperial Brands
• Japan Tobacco
• British American Tobacco
• Kumulus Vape