Commentary: UK Tobacco Market
While the UK tobacco market has been very prominent in years gone-by there are signs of serious change amongst the UK adult population. A survey this week confirmed that for the first time in 80 years the number of tobacco smokers in UK has fallen below 20% of the adult population. When you bear in mind that 70% of men and 40% of women smoked in 1962 this is a massive change in the demographics of the UK tobacco market. So, what is pushing this changing environment in the UK and is it being replicated across the globe?
There are many reasons why the UK tobacco market is under pressure and indeed why the $700 billion worldwide tobacco market is feeling the strain. We have an array of Western governments pushing through tobacco tax increases, changing prominent packaging designs as well as reducing advertising options for these massive conglomerates. However, many people believe that the ongoing success of electronic cigarettes is creating a situation of “death by a thousand puffs”.
What does this survey show us?
Researchers at University College London have been monitoring tobacco cigarette use in the UK for some time now. The recent survey was based upon replies from over 22,000 adults across the UK taking in an array of social groups, age groups and ethnic groups. There are differences between the various groups, with the highest level of tobacco cigarette use very much focused upon middle to low income households, but the trend is down in all areas.
There are also signs that the rate of decrease in the number of smokers across the UK is accelerating with the average yearly reduction around 0.6% since 1970 although rising to 0.8% in 2013. While there is no doubt that various regulatory changes have had an impact upon the tobacco cigarette market many people believe that it is electronic cigarettes which could sound the eventual death knell. Some experts believe that the number of electronic cigarette users around the globe will outnumber their tobacco cigarette counterparts by 2030 which would see a massive reduction in tobacco tax income.
Interestingly, some years ago we saw a similar trend in France although while politicians, health experts and pressure groups took their eye off the ball, patting themselves on the back for a job well done, the rate did increase for a short time. It is unlikely that the UK government will reduce the ongoing pressure on tobacco cigarette users although there are concerns that a reduction in tobacco taxes will at some point mean the introduction of electronic cigarette taxes. However, the UK government at this moment in time does not appear to have any short to medium term aspirations to introduce an electronic cigarette tax.
It is also worth noting that the worldwide tobacco cigarette industry is still worth in excess of $700 billion per annum although this figure is set to fall significantly in years to come. The authorities have a very difficult situation on their hands because some experts believe that electronic cigarettes could literally save millions of lives due to their significantly reduced health issues compared to tobacco cigarettes. This is something which will pan out in due course as we see an array of long-term medical trials come to fruition.
Is this the end of the UK tobacco market?
While there is no doubt that the trend for tobacco use in the UK is headed downwards, there will always remain a core number of dedicated tobacco cigarette smokers. It is anybody’s guess the size and nature of this particular “core support” but it seems inevitable that electronic cigarettes will continue to eat away at this market. In the medium term we will likely see focus switch away from the tobacco cigarette industry to the electronic cigarette industry as the authorities look to make up any future tobacco tax shortfall. However, will it simply be a case of introducing a tax on electronic cigarettes?
Perhaps the one major hurdle in the way of the UK authorities, with regards to an electronic cigarette tax, is the fact they, amongst many others, underestimated the popularity of electronic cigarettes. There is now a growing feeling that both the authorities and tobacco cigarette companies are behind the growth curve in electronic cigarettes and playing a very difficult game of catch-up. It will be interesting to monitor the future uptake of electronic cigarettes in the UK and compare and contrast this to the early stages of the tobacco cigarette market. These are now two markets moving in distinctly different directions!
Mark Benson is a contributing author for Spinfuel eMagazine. His continuing columns will bring a level headed approach to the dynamics involved in realizing a positive future for the e-cigarette industry. For more information on electronic cigarettes and the various products available please visit the OKCigs website