Реферат: Marketing Strategy of the UK Cigarette Industry, Communicaton

Introduction

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<span Tahoma",«sans-serif»">I’m looking at this issue for unitcommunication.  The subject of thisreport is “Marketing Strategy of the UK Cigarette Industry”.  It would cover the information about the mainmanufacturers such as “Imperial Tobacco”, “Gallaher Group Ltd” and “BritishAmerican Tobacco” in the UK. The whole point of this report is aimed at talkingabout marketing strategies that the tobacco manufactures are using for stayingin the market. Three of the world’s fivelargest tobacco companies are based in the UK.  BAT, with 11% of theglobal market, is the world’s second largest tobacco company, after PhilipMorris  which has 18%, while ImperialTobacco and Gallaher hold fourth and fifth places respectively

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Imperial Tobacco

Imperial Tobacco Group is the worldnumber four in the cigarette manufacture and distribution sector. Its brandsare divided into several ranges so as to reach a wide a market as possible.They include Embassy and Regal, Davidoff (so-called «luxury»cigarettes), SuperKings and John Player Specials (mid-priced), and Lambert& Butler (more cheaply priced). However the group's business does not focus just on cigarettes. ImperialTobacco also produces cigars, pipe tobacco brands, and is also the world leaderin hand-rolling tobacco with the Drum brand. Not to mention RIZLA, making thefirm a giant in the cigarette paper market too (in 1997 Imperial Tobacco bought Rizla, the hand-rolling cigarette papercompany).

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<span Tahoma",«sans-serif»;letter-spacing:-.1pt">Imperial’s share of the UKcigarette market has been steadily increasing in recent years and now stands at44.9%. In 2004 the company reported overall operating profits of Ј1,218million, of which Ј454m were derived from UK sales.  In 2002 it acquired the German tobaccocompany Reemtsma. Imperial also has a 43% stake in the Swedish snuff producer,Skruf.

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<span Tahoma",«sans-serif»">British American Tobacco

<span Tahoma",«sans-serif»">British American Tobacco (BAT), theworld's second largest tobacco company, is based in Britain.

<span Tahoma",«sans-serif»">It is the world's most international tobacco group, withbrands sold in 180 markets around the world.

STRAT

The tobacco industry as a whole is suffering from growingawareness of the health risks of smoking and aggressive anti-smokinglegislation, particularly in developed markets. The tobacco companies havemanaged to offset declines in developed markets by expanding to underdevelopedmarkets and in the short to medium-term at least, falls in volumes in developedmarkets will be offset by increases in underdeveloped markets.

Tobacco stocks are thus far from the greatest growth storyaround; however, what they do offer investors is fairly strong cash flows anddividends. Years of working around the anti-smoking lobby and governmentlegislation have kept the industry on its toes; tobacco bosses stand accused ofmany things but sloth and inefficiency are not amongst them; which is good froman investor’s point of view.

The company says that a combination of good operationalperformance, effective cash management and a continued focus on reducing costs,leaves it well placed to build on this positive momentum — sentiments that weare inclined to agree with.

<span Arial",«sans-serif»">Weand several other tobacco companies, including the other two largestinternational companies

<span Arial",«sans-serif»">– <span Arial",«sans-serif»">PhilipMorris and JT International –<span Arial",«sans-serif»"> have worked together to developnew, globally consistent International Marketing Standards for the appropriatepromotion and distribution of tobacco products world wide. They represent a‘raising of the bar’, and establish a benchmark for the industry world wide.

<span Arial",«sans-serif»">Launchedin September 2001 and building on our existing principles, the InternationalMarketing Standards set down detailed guidance on all aspects of tobaccomarketing, from print, billboards and electronic media to promotional events,packaging and sponsorship.

<span Arial",«sans-serif»">Webelieve the Standards will have a real impact in many parts of the world whererestrictions on tobacco marketing are lower, for example, than in the UK orwestern Europe. We are inviting more tobacco companies to subscribe to theStandards, and we aim to work with regulators to see them incorporated intolaws or agreements that ensure effective local implementation.

<span Arial",«sans-serif»">Centralto the Standards is our long held commitment to ensuring that no marketingactivity is directed at, or particularly appeals to, youth. For example, theStandards make it absolutely clear that our marketing activities should notappeal to youth or suggest that smoking enhances popularity orsporting, sexual or professional success.

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<span Arial",«sans-serif»">Ourcompanies’ adherence to the Standards is covered by a continuous review cycleinvolving audit committees, internal audit and local management. 

<span Arial",«sans-serif»">Inmany parts of the world, existing laws or voluntary codes fall short of theStandards. We have now established a common basis for clearly understoodmarketing practice. It sets a new baseline for acceptable tobacco marketingworldwide that significantly ‘raises the bar’. Of course in any countries witheven tighter restrictions, we will abide by the laws and restrictions thosecountries set.

<span Arial",«sans-serif»">Thenew Standards are part of our commitment to supporting, and helping to deliver,balanced tobacco regulation that meet society's expectations, while ensuringthat adult consumers can continue making informed choices about a legalproduct.

<span Arial",«sans-serif»">Dialogue

<span Arial",«sans-serif»">InJanuary 2000 we proposed a Partnership for Change, with 20 practicalsuggestions for building constructive dialogue amongst the industry,government, public health groups and others on tobacco issues, includingmarketing.

<span Arial",«sans-serif»">Weaim for the Marketing Standards to be a further basis for building constructivedialogue. We seek to consult with stakeholders on the Standards and welcometheir views, including on how best to monitor adherence.

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<span Tahoma",«sans-serif»">Strategies

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<span Tahoma",«sans-serif»">Sodominating the tobacco market, Imperial Tobacco pursues an aggressive expansionstrategy. Other than its large European market, the group has taken over theHorizon, John Brandon and Peter Stuyvesant brands, which has taken it into theAustralian and New Zealand markets, and bought out Tobaccor, the second biggestcigarette producer in Sub-Saharan Africa, giving it a firm foothold on theAfrican continent and in Madagascar.Finally, Imperial Tobacco acquired thelicence to distribute Marlboro (Philip Morris group) in the United Kingdom andin 2002 it took over the German cigarette firm (the world's fourth biggestmanufacturer) Reemtsma, thus strengthening its position in Central and EasternEurope.

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<span Geneva",«sans-serif»">GarethDavis, chief executive of the biggest tobacco manufacturer in Britain, ImperialTobacco, predicted yesterday that there would be no reduction in the number ofpeople smoking in England and Wales following the partial ban on smoking inpublic spaces, planned by the government for the summer of 2007.

<span Geneva",«sans-serif»">Mr Davis saidsmokers «were resilient and adaptable» and would «quicklylearn» the lessons from a smoking ban introduced in Ireland last year.While he attacked proposed restrictions on smoking in public places in Englandand Wales contained in the health bill, Mr Davis welcomed the government'sdecision to provide some consumer choice through exemptions for pubs that donot serve food and for the countries' 20,000 private members' clubs.

<span Arial",«sans-serif»">Profits rise by 11%at Imperial Tobacco as chief dismisses ban

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<span Arial",«sans-serif»">· <span Arial",«sans-serif»">Davis says new law will notstop people smoking
· Closure of factories helps raise productivity by 15%<span Geneva",«sans-serif»">

<span Geneva",«sans-serif»">SimonBowers
Wednesday November 2, 2005
The Guardian<span Geneva",«sans-serif»"> <span Geneva",«sans-serif»">

<span Geneva",«sans-serif»">GarethDavis, chief executive of the biggest tobacco manufacturer in Britain, ImperialTobacco, predicted yesterday that there would be no reduction in the number ofpeople smoking in England and Wales following the partial ban on smoking inpublic spaces, planned by the government for the summer of 2007.

<span Geneva",«sans-serif»">Mr Davis saidsmokers «were resilient and adaptable» and would «quicklylearn» the lessons from a smoking ban introduced in Ireland last year.While he attacked proposed restrictions on smoking in public places in Englandand Wales contained in the health bill, Mr Davis welcomed the government'sdecision to provide some consumer choice through exemptions for pubs that donot serve food and for the countries' 20,000 private members' clubs.

<span Geneva",«sans-serif»"><a href=«ads.guardian.co.uk/click.ng/Params.richmedia=yes&spacedesc=mpu&site=Guardian&navsection=1699§ion=103614&country=gbr&rand=»3401149"><img src="/cache/referats/24283/image001.gif" v:shapes="_x0000_i1025">

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<span Geneva",«sans-serif»">«Itis clear that smokers will continue to smoke,» Mr Davis said. «Theremay be an initial dip in consumption but this will diminish over time.»

<span Geneva",«sans-serif»">He was speakingafter Imperial posted an 11% rise, to Ј1.1bn, in underlying pre-tax profit forthe year to September 30 on turnover that was 4% higher at Ј3.1bn — in linewith analysts' expectations. Three factory closures over the year helped raiseproductivity by 15%, with further cost-cutting announcements, including theclosure of the Rizla factory in Treforest, south Wales, made in September.Shares in the group closed down 5p at Ј16.15.

<span Geneva",«sans-serif»">In Britain, whereImperial has 44.5% of the market, the group's Lambert & Butler brand keptits leadership with a 16% share. Richmond, another budget brand launched byImperial six years ago, grew its share by 1.5 percentage points to 14.7%.

<span Geneva",«sans-serif»">Mr Davis, whodoes not accept that smoking causes lung cancer, repeated claims that theavailable scientific research on passive smoking does not suggest it is a majorhealth risk. «If there is a risk, it is very small,» he said.

<span Geneva",«sans-serif»">Mr Davis alsopointed to «the most credible of all surveys», conducted by theOffice for National Statistics, which had found that 71% of those questioned tobe opposed to an outright ban on smoking. He said it was disappointing thatpoliticians in Scotland, where a total ban will come into force next year, hadnot paid greater heed to the survey. «Public opinion [in Scotland] seemsto have been ridden rough-shod over.»

<span Geneva",«sans-serif»">He said:«Bans of this sort affect consumption by between 1% and 2%.» Pointingto the Republic of Ireland, Mr Davis said Imperial sales had experienced a 5%drop in the initial months of the ban. «But by the time we got to theyear-end, it was a 2% reduction, and now it is slightly rising.» Imperialbelieves the number of smokers in Ireland has not dropped and remains at 29% ofthe adult population — slightly above the proportion in Britain.

<span Geneva",«sans-serif»">Mr Davis said a«litigation overhang», which had depressed the value of tobaccostocks for more than 15 years, especially because of claims brought by dyingsmokers in the US, «had dissipated». However, he insisted the companywould not abandon its policy of avoiding exposure to US markets without«extensive consultation with our shareholders

<a href=»www.50plushealth.co.uk/index.cfm?articleid=«1184»>http://www.50plushealth.co.uk/index.cfm?articleid=1184

The tobacco industry

Gallaher Ltd, Imperial Tobacco Ltd and Rothmans (UK) Ltd are the mainmanufacturers supplying the UK market and are increasing their export trade.British American Tobacco (BAT), the world's second largest tobacco company, isbased in Britain.

Following the completion of the merger of BAT with Rothmans, thecombined company will have a global market share of 16%, just behind the UScompany Philip Morris which has 17% of the world market.

Gallaher produces three of the four top-selling UK brands: Bensonand Hedges, Mayfair, and Silk Cut. Imperial Tobacco produces the leading UK brand Lambert and Butler.  Other brands produced by Imperial includeSuperkings, Regal, and Embassy.

Sales

Sales of duty-paid tobacco products in the UK amounted to 62 billioncigarettes, 2.7 million kg of hand-rolling and pipe tobacco, and 1 billioncigars in 1999.

This figure is declining as bootlegging and smugglingincreases.  In 1998, BAT, one of thelargest companies in the UK, made a profit of Ј1,011 million.

Value

The value of domestic sales for all the tobacco products listedabove amounted to Ј12.1 billion.

Tax

Cigarette taxation in the UK is the highest in the world, makingcigarettes, on average, more than twice as expensive as elsewhere.  People in the UK spend about 12 billionpounds on cigarette products of which nearly 10 billion is tax.

Advertising and sponsorship

Tobacco sponsorship of sport in the UK is worth about Ј7.5 million ayear.  In 1998 a European Union Directiveto ban tobacco advertising was agreed, resulting in a gradual ban on tobaccoadvertising and promotion.  Point-of-saleadvertising will remain subject to domestic legislation (1998 European UnionTobacco Advertising Directive). By 2006 there will be a complete ban on alltobacco advertising and sponsorship throughout the EU.

Government funding to stop smoking

In England and Wales the Government has set aside Ј110 million tohelp change public attitudes about smoking and reduce its health toll.

Revenue

The UK Government earned Ј10,305 million in revenue from tobaccoduty and VAT in 1997 — Ј8,390 million in excise duty and Ј1,915 million in VAT.

Subsidies

The UK contributes to the EU's subsidised tobacco industry.  In 1997 the EU spent Ј998 million ECU (Ј735million), Ј5,370 for each of the 135,000 tobacco growers.  A high proportion of tobacco grown in Europeis unmarketable and is sold at give-away prices to Eastern Europe and Africa.

www.tobaccopapers.com/pressrelease/index.htm

. These show specific tobacco marketingstrategies undertaken in the UK – highlighting industry aims and methods. Theycover topics including sponsorship, the marketing of tobacco to young peopleand discount brands

Tobacco FactFile provides a database of informationabout the health, political, and economic aspects of tobacco use around theworld, targeted at health professionals, policy makers, educationalists and thepublic. Tobacco FactFile is a project of