Country Analysis By Region
Mexico - Cigarette production for 1996 reached 46.8 billion pieces and is expected to climb slightly to 47.0 billion pieces this year. Consumption and production are near equal in Mexico since the domestic market remains protected by a 30 percent tariff and high production costs limit exports. Consumption is expected to be up less than one percent this year due to increased retail prices and the overall weak economy.
United States - Domestic cigarette consumption was unchanged in 1996, totaling 487 billion pieces. Consumption has been stable for four consecutive years. However, cigarette consumption in the United States will likely start declining again in 1997. Since 1986, cigarette consumption has fallen nearly 17 percent. Declines in consumption can be attributed to health concerns, an increasingly aggressive anti-smoking campaign, price increases, and decreased social acceptance of smoking.
Cigarette production increased 1 percent in 1996 to 755
billion pieces. A strong export market supported the rise in
production. For 1997, production is forecast to decline slightly
due to lower exports and lower domestic consumption.
Approximately two-thirds of the United States' cigarette output
goes to the domestic market with the remainder going for export.
Exports reached a record high again in 1996, totaling 243.9 billion pieces, but are expected to be slightly lower in 1997. Total cigarette exports have grown dramatically due to the liberalization of the Japanese cigarette import market in 1985 along with the increasing popularity of American-blend cigarettes world-wide. Major destinations for U.S. cigarette exports in 1996 were Belgium/Luxembourg (a major transshipment point for cigarettes destined to other European markets), Japan, the Russian Federation, Lebanon, Cyprus, Saudi Arabia, and Singapore.
The United States is not a significant importer of cigarettes. Total cigarette imports were down 8 percent in 1996, reaching 2.8 billion pieces. Imports are expected to decline further in 1997.
Argentina - Cigarette production for 1996 was down slightly to 41.3 billion pieces and is expected to remain at this level in 1997. Consumption was down in 1996 but is expected to be up slightly in 1997 because of a 100 million piece increase in imports. Cigarette consumption has remained fairly stable. Argentina's anti-smoking policy includes limits on television advertising, warning labels on cigarette packs. A large portion of trade consists of Argentine cigarettes exported then illegally re-imported in order to bypass duties and taxes. Imports are forecast up this year because of an increase of cheap Chinese cigarettes entering from Paraguay.
Brazil- Cigarette production for 1996 was up 13 percent to 198 billion pieces and is expected to be up 5 percent in 1997. The increase in production was due to a sharp rise in exports during 1996 from 54.3 to 78 billion pieces, mostly to Belgium and Paraguay. Brazil imports few cigarettes officially, but industry officials estimate up to 25 percent of consumption consists of illegal re-imports of Brazilian cigarettes. Domestic consumption has remained stable since 1995 with growth of less than 1 percent in 1996 and forecasted at almost 2 percent in 1997 to 122 billion pieces. Improved economic conditions since 1995 have helped maintain consumption levels.
European Union - Cigarette production for 1996 was up 3 percent to 782 billion pieces. Much of the increase was in the Netherlands and the United Kingdom and can be attributed to increased exports. For 1997, production is projected to fall slightly to about 778 billion pieces mainly because of reduced UK production stemming from lower export sales. EU consumption fell during 1996 from 637 billion pieces to 612 billion pieces. Much of this decline was due to a drop in apparent consumption in the Netherlands due to increased in country sales to citizens of border states . For 1997 consumption is projected up slightly to 614 billion pieces. EU tobacco trade includes a large degree of transhipping of product from one EU member country to the next before the product moves to a third country. The only comparable measure of the importance of EU trade is net exports. From 1995 to 1996 , net exports increased 38 percent from 123 billion pieces to 170 billion pieces due largely to a sharp rise in UK and Dutch exports. The growth in UK exports is due in part to the 1992 devaluation which made British cigarettes very competitive. For 1997, net exports are forecast down slightly to 164 billion pieces largely due to smaller sales from the United Kingdom.
Austria- Cigarette production increased 18 percent during 1996 to 19.4 billion pieces and is expected to be up 8 percent in 1997 to 21.0 billion pieces. The growth in production is due to the shift of Austria Tabak (AT) production in 1996 from Berlin and Vienna to the Austrian locations of Linz, Hainburg, and Schwarz. Consumption for 1996 remained at 1996 levels of 12.72 billion pieces, but 1997 consumption is forecast up 8 percent to 13.75 billion pieces when stocks are included. Actual tax paid consumption has been falling from 13.20 billion pieces in 1995 to a forecast 12.50 billion in 1997 excluding illegal trade. According to AT officials, if illegal trade were to be included, annual cigarette consumption would total nearly 17.0 billion pieces. Exports grew from 4.2 billion in 1995 to 7.3 billion during 1996 due in part to the increased production. Legal imports are small at 520 million in 1995, 620 million in 1996, and forecast to rise to 650 million in 1997.
Belgium - Cigarette production for 1996 was down slightly to 18.70 billion pieces and is forecast to fall to 18.67 billion pieces in 1997. As consumption continues to fall. Imports remain steady at 2.00 billion pieces during 1995 and an increase to 2.10 billion in 1997. Exports at about 11.60 billion pieces expanded slightly in 1996 and are expected to fall slightly in 1997. Tobacco products have strong health warnings and must show nicotine and tar content. All advertisements must be cleared by the Ministry of Public Health and must state " tobacco is bad to your health." Sales of cigarettes from vending is limited to cafes an d restaurants Tobacco advertisements can not be placed in train stations and airports. Since 1987, smoking has been prohibited in all public buildings. Cigarette prices are slightly over $3.50 per pack with taxes accounting for 77 percent of the price. This has reduced consumption of local cigarettes and an increase in smuggling.
France - Cigarette production in France for 1996 is up 1 percent to 46.93 billion pieces, and are expected to grow slightly in 1997. The slow growth in production is due to the steady one billion piece per year decline in non-filter cigarette production. Filter production is up almost 3 percent per year. Domestic consumption in 1996 was 86.16 billion pieces, down over 2 percent from 1995, and a further 2 billion piece decline is forecast for 1997. French cigarette consumption has been trending lower since 1991 due to price increases, and a 1995 law that prohibits smoking and advertisements in public spaces. French cigarette prices currently average about $3.05 per pack, including a 72 percent tax. Exports increased from 1995 to 1996 by 34 percent to 11.8 million pieces with Germany Turkey and Moldavia accounting for over half of sales and further growth in exports forecast for 1997. Imports increased slightly during 1996 and a slight fall to 50.5 billion pieces is expected in 1997. Germany and the Netherlands are the main suppliers. These two countries mostly ship tobacco produced from U.S. tobacco.
Germany - Cigarette production in 1996 was 21.78 billion pieces, down 1 percent from 1995. For 1997, production is forecast up 200 million pieces. The drop in production during 1996 is believed due to a reduction in export sales to the east . German tobacco consumption dropped slightly during 1996 and a further drop to 151.3 billion pieces is predicted for 1997. Total actual consumption is estimated at 169.3 billion pieces including illegal imports of 15.2 billion pieces and adjustments for changes in stocks. German cigarette prices during 1996 are up less than the rate of inflation. Tobacco consumption is less controversial in Germany than in other EU countries; an initiative to ban smoking has the support of only 25 percent of German parliamentarians. To keep pressure on the cigarette sales down, the tobacco industry has removed vending machines and advertising from neighborhoods near schools. Exports fell from 85.0 to 81.6 billion pieces during 1996 and are expected to be only slightly higher in 1997. The drop in sales to Eastern Europe and the states of the former Soviet Union. Imports were down slightly during 1996 and are expected to recover slightly to 15.30 million during 1997.
Italy - Cigarette production in Italy during 1996 increased 3 percent to 51.48 billion pieces, and 1997 production is forecast down slightly to 51.2 billion pieces. The increase in production was due only to the need to increase stocks by the cigarette monopoly. Consumption for 1996 was down slightly at 87 billion pieces. Overall cigarette consumption is on gradual decline in Italy. Actual consumption was about 10 billion pieces higher if illegal imports were included. Imports were up 2 percent during 1996 to 39.30 billion pieces and are expected to reach 40 billion pieces in 1997. Import consumption has expanded 30 percent from 1986 to 1996 and now accounts for half of domestic consumption while domestic cigarette consumption is down 46 percent. Cigarette exports increased from 10 to 38 billion pieces during 1996 and is expected to hold at 30 billion during 1997.
Netherlands - Cigarette production increased 10 percent during 1996 to 111.24 billion pieces and a further increase to 115.00 billion pieces is forecast for 1997. This increase in production was to supply the export market. From 1995 to 1996 exports were up 11 percent and further increases are forecast for 1996. Imports are expected to remain at about 18 billion pieces. Domestic consumption or sales fell during 1996 from 35.89 billion pieces in 1995 to 18.89 in 1996. However, when adjusted to account for foreign visitor purchases of lower cost Dutch cigarettes in anticipation of local cigarette tax increases in their own countries, actual domestic consumption only fell from 17.20 billion pieces to 15.43 billion pieces.
Spain - During 1996, cigarette production fell from 76.49 billion pieces to 70.58 billion with recovery in 1997 to 72.40 billion pieces. The drop in 1996 was due to lower demand domestic cigarettes. Consumption during 1996 was down 4 percent to 74.58 billion pieces while imports were up from 4.60 billion to 7.27 billion pieces. For 1997, imports are forecast at 7.5 billion pieces. Exports continue to slowly increase reaching an expected 33.0 billion pieces in 1997.
OTHER WESTERN EUROPE
Switzerland - Domestic consumption was down about 2 percent in 1996, totaling 15.2 billion pieces. The downward trend is forecast to continue in 1997 due to higher taxes and an increasingly aggressive anti-smoking campaign. Swiss cigarette production rose 3 percent in 1996, reaching 43.1 billion pieces. Cigarette exports, which account for 65 percent of production, have been trending higher and reached 28.1 billion pieces in 1996. Expanded sales to markets in Eastern Europe and Asia account for much of this growth. Switzerland imports almost exclusively from European Free Trade Association (EFTA) countries, due to duty free cigarette trade among members. Swiss cigarette imports in 1996 reached 209 million pieces and are expected to remain near 200 million in 1997.
Bulgaria - Cigarette production decreased 23 percent in 1996 to 57.2 billion pieces. Much of the decline was due to fewer export opportunities and lower domestic demand. Lower real incomes has forced cigarette factories to change their marketing strategies and increase production of less expensive brands including non-filter cigarettes. Consumption of home-made cigarettes is also on the rise. Exports declined 28 percent in 1996 to 44.0 billion pieces. Nearly 80 percent of Bulgarian cigarette exports are destined to the former Soviet Republics, particularly Russia and the Ukraine. Cigarette imports in 1996 reached 2.8 billion pieces. Smuggling continues to flourish and impede legal imports. Stronger border controls are expected to curb the flow of illicitly traded cigarettes in 1997.
The outlook for 1997 is for cigarette production and exports to increase. Production is expected to reach 69.6 billion pieces due to an upswing in trade to the Ukraine and Russia, and due to a shift in domestic demand. Economic conditions are expected to improve in 1997 and lead to an increase in the demand for more moderately priced domestically manufactured brands.
Romania - Cigarette production in 1996 is estimated at 20.5 billion pieces, unchanged from 1995. For 1997, cigarette production is projected to increase slightly to around 21 billion pieces due to an expected increase in leaf availability. Non-filtered cigarette production has gradually declined due to the strong competition of higher quality foreign brands. Filtered cigarettes now account for about 60 percent of production. Romanian cigarette imports reached 15.0 billion pieces in 1996, a decrease of almost 28 percent from 1995. Much of this decline was a result of policy measures taken by the government to curb smuggling and tax evasion. It is estimated, however, that a significant percentage of Romanian cigarette imports are still illicitly traded. The main suppliers of Romania's cigarette imports are the United States, Switzerland, Bulgaria, Greece, Cyprus, and Germany. Romania did not register any cigarette exports in 1996 and is not expected to do so in 1997.
AFRICA AND MIDDLE EAST
Egypt - Cigarette production is projected up 6 percent for 1997 following a 7 percent rise during 1996. The growth in production is attributed to increased domestic demand due to little increase in prices, fixed by the government in 1991, and increased smoking by women and teenagers. Egyptian anti-smoking policies include a prohibition on cigarette advertising, health warnings on the tar and nicotine content, no smoking on public transport, and on domestic airlines. Cigarette imports are forecast at 350 million pieces for 1997, unchanged from 1996. Exports for 1997 are forecast down 9 percent to 1.0 billion pieces. The drop in trade is attributable in part to the ending of barter trade with the former Soviet Union and the ending of exports to Libya. It was found that most of the cigarettes shipped to Libya were exported at below the domestic price and were smuggled back into Egypt.
Turkey - Cigarette production was up 10 percent during 1996 to 109.0 billion pieces and a further 3 percent rise is forecast for 1997. Consumption was up 2 percent in 1996 to 98.51 billion pieces and a further rise to 100.0 billion pieces is forecast for 1997. Consumption has grown despite increased controls on advertisement and sales to minors. During 1996 exports increased from 3.0 billion pieces to 10.5 billion with foreign companies accounting for 8.1 billion of these shipments. A further increase to 12.0 billion pieces is expected this year. Private cigarette companies, have tried to have the government remove the 25 percent import tax on tobacco which makes their production of blended cigarettes , using imported flue cured and burley tobacco, less competitive with the EU countries, but low labor costs have encouraged expanded production in Turkey. Private companies account for 24 percent of cigarette production, almost all blended types.
South Africa - Cigarette production fell 2 percent during 1996 and a further 2 percent decline to 35.75 billion is projected for 1997. This drop is reflected in the decline in consumption which seems to be due largely to the increased taxes , up 52 percent in March 1997, and South African government labeling and advertising restrictions. Cigarette imports, over 80 percent from the United States were up 17 percent in 1996 to 987 million but are forecast to drop 4 percent to 950 million this year. Exports mostly to other African countries fell 15 percent during 1996 ,but are forecast to increase slightly to 1.50 billion in 1997.
China - In 1996, Chinese cigarette production was 1.721 trillion pieces, down almost 1 percent from 1995 production due to a nearly 59 percent drop in non-filter cigarette production to only 86.05 billion. Filter production was up 7 percent to 1.635 trillion pieces. Total production for 1997 is expected to be up slightly. Domestic consumption for 1996 is down less than 1 percent to 1.68 trillion pieces and may be related to the drop in non-filter cigarette production. The anti-smoking regulations appear to have little impact on Chinese demand for cigarettes. Consumption for 1997 is projected down slightly. Cigarette imports for 1996 were up 36 percent to 17.96 billion and are expected to drop to 17.00 billion this year. At about 7 billion pieces each the United States and Great Britain are the two largest suppliers of China's cigarette imports. Exports were down 6 percent in 1996 to 58.8 billion pieces. For 1997 exports are forecast at 60.0 billion. Most exports are to South East Asia. Singapore, Philippines, South Korea and Hong Kong account for over 60 percent of trade.
Hong Kong - Cigarette production in Hong Kong for 1996 was down 2.0 billion pieces due to capacity reduction by the Hong Kong Tobacco Company, one of Hong Kong's major producers. For 1997 a production is forecast up 1.0 billion pieces. Production for 1997 is forecast at 22.3 billion pieces and is only one third the size of imports at 65.0 billion pieces. Most of the cigarettes produced in Hong Kong are low quality brands produced mainly for export to China. Consumption for 1996 declined from 7.43 to 4.52 billion pieces and a further decline to 4.3 billion pieces is projected for 1997. The decline in consumption is due in part to rising health consciousness and controls on advertisements and increased taxes. Based on Hong Kong Census and Statistics Department reports on smoking , the number of smokers are down 74 percent from 1982 to 1996. This is near the reported drop in consumption between 1982 and 1995 of 79 percent. The reported very large drop in consumption for 1996 and projected for 1997 may reflect reduced consumer buying as smokers consumed individually held stocks purchased before the tax increases; it may also reflect increased consumption of smuggled cigarettes. Cigarette imports were up 6 percent in 1996 to 62.79 billion pieces and are expect reach 65.00 billion in 1997. Exports were up 7 percent in 1996 to 79.57 billion pieces and are expected to reach 83.0 billion pieces in 1997. China is Hong Kong's largest cigarette trading partner. However, much of this trade may include cigarettes exported from China to evade taxes and then illicitly shipped back into China excluding the 244 percent import duty.
Indonesia - Cigarette production for 1996 was up 6 percent in 1996 to 197.1 billion pieces and a 5 percent increase in 1997 to 207.5 billion pieces is forecast. Clove cigarettes account for about 80 percent of domestic production. Cigarette consumption was up 8 percent during 1996 and a 5 percent increase to 187.8 billion pieces is forecast for 1997. Increased incomes, minimum wage up 10 percent in 1997, and a growing population account for the increased consumption. Imports are minimal at about 300 million pieces per year. Exports were down 9 percent in 1996 falling to 19.23 billion pieces and are expected to recover slightly to 20.0 billion pieces in 1997. Most exports are non-clove cigarettes with Cambodia, Thailand and Malaysia the major markets.
Japan - Cigarette production for 1996 was up 3 percent to 271.03 billion pieces with 1997 projected at 266.3 billion pieces. Production has expanded due to increased domestic demand. However, in 1997 import competition is expected to cause production to fall. Consumption for 1996 was up 6 percent to 336.5 billion pieces. It is believed that the rise in domestic sales in 1996 was an attempt by consumers to avoid the 3 to 5 percent increase in the nation consumption tax effective on April 1,1997. Consumption for 1997 is projected fall to 333.3 billion pieces. Imports increased 8 percent during 1996 to 77.29 billion pieces with United Stats holding nearly 95 percent of the market. For 1997 imports are projected to reach 79.0 billion pieces. Exports for 1996 fell 33 percent to 11.78 billion pieces with 1997 export sales projected at 12.0 billion pieces. The drop in exports may be due to changing tastes in most markets and expanding domestic production in South Korea , the largest Japanese market.
Philippines - During 1996, Philippine cigarette makers expanded production to 68.55 billion pieces, up 20 percent from 1995. Much of the increase was due to manufacturers efforts to avoid new taxes imposed during 1997. Production in 1997 is forecast to fall to 57.5 billion pieces slightly above 1995. During 1996, domestic consumption increased 11 percent to 67.33 billion pieces and is expected to fall to 59.0 billion during 1997. The drop in consumption this year is in part attributable to the increased sales last year, higher taxes, and increased illegal importation. Total actual consumption in the Philippines is estimated at between 85 and 90 billion pieces per year. This implies that smuggling may account for about 25 percent of total consumption in a normal year. During 1996 imports fell sharply from 4.41 to 1.06 billion pieces and are expected to reach 2.0 billion pieces in 1997 due to reduced local production. The drop in imports appears to be due to increased smuggling. Exports more than doubled in 1996 reaching 2.23 billion pieces. With the drop in production this year , exports are forecast down to only 0.50 billion pieces.
Singapore -During 1996, cigarette production increased 6 percent to 15.82 billion pieces due to expanding exports. For 1997, a 3 percent rise to 16.32 billion pieces is expected as the growth in exports slow. Domestic consumption for 1996 is up 11 percent despite stringent controls on smoking in public. For 1997, a further 3 percent increase is expected. However, the growth in consumption may be misleading because unreported smuggled cigarettes are in decline as Singapore has sharply increased enforcement of anti-smuggling controls. Cigarette imports in 1996 were up 18 percent to 62.67 billion pieces with the United States accounting for almost 30 percent of the market, and the United Kingdom about 40 percent. During 1996, cigarette exports increase from 50.22 to 59.28 billion pieces and a further increase to 61.03 billion pieces is forecast for 1997. A substantial proportion of the exports are cigarettes that were originally imported from Hong Kong and returned to the country of origin, and re-exports of British and US cigarettes to China and other South East Asian markets.
South Korea - In 1996, the South Korean Government controlled Korea Tobacco & Ginseng (KT&G) monopoly expanded cigarette production by almost 9 percent to 95 billion pieces. For 1997, a further 5 percent increase to 100 billion is expected. Domestic consumption for 1996 was up 7 percent, and a further 5 percent expansion is forecast for 1997. The growth in consumption is due to increased smoking among women and younger people. Cigarette imports were up nearly 9 percent during 1996, and a 5 percent rise is forecast for 1997. The United States accounted for almost 70 percent of cigarette imports by value. Export sales doubled in 1996 but totaled only 1.55 billion pieces compared to imports of nearly 95.04 billion pieces. Further growth in exports is expected in 1997. The KT&G has been trying to discourage imported cigarette consumption by introducing new domestic brands. Imported brands account for about 11 percent of local consumption. The introduction of new brands also allows KT&G to increase domestic cigarette retail prices which are regulated by the central government.
Taiwan - In 1996, cigarette production was down 3 percent to 26.73 billion pieces and is expected to remain at this level in 1997. Since 1987 when free trade in cigarettes began, domestic production has been in decline. It is believed that the import market share will hold at about 29 percent which was reached in 1996. Consumption was down slightly during 1996 at 37.63 billion pieces and is expected to remain at this level in 1997. The drop in 1996 consumption, a historical first, is believed due in part to depressed economic conditions. Imports in 1996 fell slightly to 10.91 billion pieces due for the most part to a depressed economy and are expected to remain unchanged in 1997. Taiwan's low tar domestic brands are expected to become more competitive. Currently imported cigarettes sell for about 40 Taiwan Dollars per pack compared to TW$15 for domestic brands. Proposed trade reforms are expected to reduce imported prices. Exports are very small but expanding as Taiwan introduces more modern cigarette brands.
Thailand - The Thailand Tobacco Monopoly (TTM) data shows cigarette production in 1996 was up almost 14 percent in 1996 to 49.0 billion pieces, but is expected to drop 4 percent in 1997. A lower production is forecast because the TTM expects a large reduction in domestic stocks in 1997. Early last year cigarette stocks were increased in anticipation of higher excise taxes. The TTM permits free trade in cigarettes. Imports were down 7 percent last year due to over stocking, but are expected to be up 11 percent this year to 1.8 billion pieces with most of the imports coming from the United States. Cigarette exports were up over 100 percent last year but only reached 223 million pieces.