Table of Contents
Tobacco in Bulgaria - Industry Overview
EXECUTIVE SUMMARY
Tobacco market stabilises after a heavy volume decline in 2009
Bulgartabac still awaiting privatisation
Bulgartabac continues to lose share
Introduction of a full smoking ban fails
OPERATING ENVIRONMENT
Legislative overview/FCTC ratification
Summary 1 Legislation Summary at a Glance
Legislation: EU Directives:
Minimum legal smoking age
Smoking Prevalence
Table 1 Smoking Prevalence in Adult Population 2005-2010
Table 2 Number of Smokers by Gender 2005-2010
Tar levels
Advertising & Sponsorship
Point-of-sale Display Bans
Smoking in public places
Low Ignition Propensity (LIP) regulation
Electronic cigarettes
Litigation
Death by cause
Table 3 Death by Cause 2005-2010
TAXATION AND PRICING
Duty paid packet marks
Taxation rates
Table 4 Taxation and Duty Levies 2005-2010
Average cigarette pack price breakdown
Table 5 Average Cigarette Pack Price Breakdown: Brand Examples
PRODUCTION/IMPORTS/EXPORTS
Table 6 Trade Statistics –Tobacco Leaf
Table 7 Production/Imports/Exports 2005-2010
Illicit trade in cigarettes
MARKET INDICATORS
Table 8 Illicit Trade Estimate of Cigarettes by Volume 2005-2010
MARKET DATA
Table 9 Sales of Tobacco by Category: Volume 2005-2010
Table 10 Sales of Tobacco by Category: Value 2005-2010
Table 11 Sales of Tobacco by Category: % Volume Growth 2005-2010
Table 12 Sales of Tobacco by Category: % Value Growth 2005-2010
Table 13 Forecast Sales of Tobacco by Category: Volume 2010-2015
Table 14 Forecast Sales of Tobacco by Category: Value 2010-2015
Table 15 Forecast Sales of Tobacco by Category: % Volume Growth 2010-2015
Table 16 Forecast Sales of Tobacco by Category: % Value Growth 2010-2015
DEFINITIONS
Summary 2 Research Sources
Tobacco in Bulgaria - Company Profiles
British American Tobacco Bulgaria EOOD in Tobacco (Bulgaria)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 5 British American Tobacco Bulgaria EOOD: Competitive Position 2010
Bulgartabac Holding Group in Tobacco (Bulgaria)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
Summary 8 Bulgartabac Holding Group: Production Statistics 2010
COMPETITIVE POSITIONING
Summary 9 Bulgartabac Holding Group: Competitive Position 2010
Imperial Tobacco Bulgaria EOOD in Tobacco (Bulgaria)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION BY FACTORY
COMPETITIVE POSITIONING
Summary 11 Imperial Tobacco Bulgaria EOOD: Competitive Position 2010
King's Tobacco AD in Tobacco (Bulgaria)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Philip Morris Bulgaria EOOD in Tobacco (Bulgaria)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 16 Philip Morris Bulgaria EOOD: Competitive Position 2010
Cigarettes in Bulgaria - Category Analysis
HEADLINES
TRENDS
Taxation on cigarettes in Bulgaria was increased dramatically at the beginning of 2010 following an agreement between the Bulgarian government and the EU to reach minimum excise levels. In fact, the Bulgarian government increased excise tax above the level negotiated with the EU for 2010. In transposing EU Tobacco taxation directives, the Bulgarian Law on Excise and Tax Storehouses (with follow-up ordinances) was amended. Excise was increased from 1 January 2010, with a transition period of three months, during which cigarettes with old excise stamps could be sold. Thus, with effect from April 2010, the ad valorem component of cigarette taxation was reduced from 40.5% to 36%, but at the same time specific tax was increased from BGN41 to BGN74 per 1,000 sticks, effectively increasing unit price per stick by some 6%.
COMPETITIVE LANDSCAPE
The Tobacco industry in Bulgaria was long dominated by the state-owned monopoly Bulgartabac Holding. However, in 2007, Bulgaria joining the EU and the subsequent liberalisation of the market, together with the removal of state-regulated unit prices, led to the rapid expansion of multinational importers and a decline in Bulgartabac’s share. In addition, the company’s share declined further as, after numerous attempts, parts of the company were privatised in 2008. The Tobacco factories in Stara Zagora and Plovdiv were sold to private companies and now operate as independent local producers, marketing their own brands. The Bulgarian government has announced its intention to fully privatise the rest of the company in 2011, but its sale conditions have proved unacceptable to many potential purchasers and so its privatisation remains in doubt. The government has demanded as a condition of sale that the future owner must purchase a set quota of its Tobacco from local Tobacco producers. This is deterring multinational manufacturers which generally purchase their Tobacco from a variety of countries.
NEW PRODUCT DEVELOPMENTS
DISTRIBUTION
PROSPECTS
Over the forecast period cigarettes is expected to post CAGRs of 1% in both constant value and volume terms. The halt in excise tax hikes and ongoing competition between the main players will contribute to slow volume growth. In addition, the lowering of illicit trade and the increased efforts of the Bulgarian government to tighten border control, related to the efforts of Bulgaria to join the Schengen area, will contribute to the volume growth of cigarettes for the first time since 2003.
CATEGORY BACKGROUND
Cigarettes: Price Bands
Summary 17 Cigarette Price Band Definitions
Cigarettes: Menthol/standard
Cigarettes: Filter/non-filter
Cigarettes: Carbon/standard filter
Cigarettes: Filter length
Cigarettes: Slim/superslim vs regular
Table 17 Slim/superslim Penetration
Cigarettes: Pack size
Cigarettes: Pack type
CATEGORY DATA
Table 18 Sales of Cigarettes by Tar Level: Volume 2005-2010
Table 19 Sales of Cigarettes by Tar Level: Value 2005-2010
Table 20 Sales of Cigarettes by Tar Level: % Volume Growth 2005-2010
Table 21 Sales of Cigarettes by Tar Level: % Value Growth 2005-2010
Table 22 Sales of Cigarettes by Price Band: % Volume Breakdown 2005-2010
Table 23 Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2005-2010
Table 24 Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2005-2010
Table 25 Sales of Cigarettes by Filter Vs Non-filter: % Volume Breakdown 2005-2010
Table 26 Sales of Filter Cigarettes by Carbon Vs Non-carbon: % Volume Breakdown 2005-2010
Table 27 Sales of Cigarettes by Length: % Volume Breakdown 2005-2010
Table 28 Sales of Cigarettes by Regular/Slim: % Volume Breakdown 2006-2010
Table 29 Sales of Cigarettes by Pack Size: % Volume Breakdown 2005-2010
Table 30 Sales of Cigarettes by Pack Type: % Volume Breakdown 2005-2010
Table 31 Cigarettes Company Shares 2006-2010
Table 32 Cigarettes Brand Shares 2007-2010
Table 33 Sales of Cigarettes by Distribution Format: % Analysis 2005-2010
Table 34 Cigarettes: Production, Imports and Exports: Total Volume 2005-2010
Table 35 Forecast Sales of Cigarettes by Tar Level: Volume 2010-2015
Table 36 Forecast Sales of Cigarettes by Tar Level: Value 2010-2015
Table 37 Forecast Sales of Cigarettes by Tar Level: % Volume Growth 2010-2015
Table 38 Forecast Sales of Cigarettes by Tar Level: % Value Growth 2010-2015
Table 39 Forecast Sales of Cigarettes by Price Band: % Volume Breakdown 2010-2015
Table 40 Forecast Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2010-2015
Table 41 Forecast Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2010-2015
Table 42 Forecast Sales of Cigarettes by Filter Vs Non-filter: % Volume Breakdown 2010-2015
Table 43 Forecast Sales of Filter Cigarettes by Carbon Vs Non-carbon: % Volume Breakdown 2010-2015
Table 44 Forecast Sales of Cigarettes by Length: % Volume Breakdown 2010-2015
Table 45 Forecast Sales of Cigarettes by Regular/Slim: % Volume Breakdown 2010-2015
Table 46 Forecast Sales of Cigarettes by Pack Size: % Volume Breakdown 2010-2015
Table 47 Forecast Sales of Cigarettes by Pack Type: % Volume Breakdown 2010-2015
Cigars in Bulgaria - Category Analysis
HEADLINES
TRENDS
Generally smokers in Bulgaria prefer cigarettes. However, in 2010 small cigars and cigarillos were sold in supermarkets and many other Tobacco outlets, unlike in previous years. Smokers seemed to be more aware of their presence than ever before. Nevertheless, cigars still remain luxury items. The nouveau riche or certain business groups, the main consumers of cigars, have started to form members clubs and organise events and meetings to popularise cigars and the cigar making process. Currently, hotels such as the Hilton, Radisson and Sheraton have small outlets offering expensive cigar brands. Perhaps in the long term, Bulgaria may develop a tradition for cigars.
HANDMADE VERSUS MACHINE-MANUFACTURED SPLITS
Table 48 Sales of Cigars by Handmade vs Machine-manufactured 2006-2010
COMPETITIVE LANDSCAPE
The cigars and cigarillos category in Bulgaria remains rather fragmented. In 2010, it was led by Altadis SA with a 49% volume share, followed by Davidoff & Cie with an 18% share. Altadis’s Romeo y Julieta held the highest brand share of 20%.
NEW PRODUCT DEVELOPMENTS
DISTRIBUTION
PROSPECTS
In 2010, the category showed signs of further potential. Over the forecast period it is anticipated to register a volume CAGR of 5% and a constant value CAGR of 3%. Small cigars is expected to be the strongest performer. Cigarillos and large cigars are also expected to contribute to overall volume growth as their tradition evolves. However, the share of both cigars and cigarillos of total Tobacco sales is not expected to increase considerably over the next five years as these products remain expensive for the average Bulgarian smoker.
CATEGORY DATA
Table 49 Sales of Cigars by Category: Volume 2005-2010
Table 50 Sales of Cigars by Category: Value 2005-2010
Table 51 Sales of Cigars by Category: % Volume Growth 2005-2010
Table 52 Sales of Cigars by Category: % Value Growth 2005-2010
Table 53 Sales of Cigars by Handmade vs Machine Manufactured: % Volume Breakdown 2005-2010
Table 54 Company Shares of Cigars Excluding Cigarillos 2006-2010
Table 55 Brand Shares of Cigars Excluding Cigarillos 2007-2010
Table 56 Company Shares of Cigarillos 2006-2010
Table 57 Brand Shares of Cigarillos 2007-2010
Table 58 Sales of Cigars by Distribution Format: % Analysis 2005-2010
Table 59 Forecast Sales of Cigars by Category: Volume 2010-2015
Table 60 Forecast Sales of Cigars by Category: Value 2010-2015
Table 61 Forecast Sales of Cigars by Category: % Volume Growth 2010-2015
Table 62 Forecast Sales of Cigars by Category: % Value Growth 2010-2015
Smoking Tobacco in Bulgaria - Category Analysis
HEADLINES
TRENDS
In contrast to cigarettes or even cigars, there is no tradition for smoking Tobacco in Bulgaria. While RYO Tobacco develops in countries with high excise tax on cigarettes and pipe Tobacco smoking is often based on tradition, in Bulgaria the situation is quite different. Despite several tax increases which pushed prices of cigarettes upwards, cigarette smoking is still cheaper than RYO Tobacco. Purchasers of RYO Tobacco tend to come from the same consumer group as cigarettes, although they are driven by different motivation. Smoking RYO cigarettes is a different experience – some consumers appreciate the different taste of RYO Tobacco and like the idea of preparing their own cigarettes. Also, hand rolling is seen as a good way to reduce the number of cigarettes smoked in a day. Pipe Tobacco is smoked by a small but loyal group of consumers (the category accounted for 22% of smoking Tobacco volume sales in 2010). On some occasions, pipe Tobacco brands are chosen instead of RYO Tobacco because of the mellow and aromatic taste.
THE ROLE AND EFFECT OF CANNABIS/MARIJUANA
DISTRIBUTION
COMPETITIVE LANDSCAPE
Smoking Tobacco is a rather fragmented category but was led by Pöschl Tabak GmbH & Co KG in 2010 with a volume share of 36% as a result of TTI Bulgaria’s good distribution. The second-and third-ranked companies in 2010 were Von Eicken GmbH and HTH Tabak BV. The remaining companies held individual shares of around 4% or below. The distributor Kaliman Caribe OOD has preferred to concentrate on gaining distribution for the cigar brands it represents (mainly offered by Altadis SA) rather than establish a leading position in the limited smoking Tobacco category.
NEW PRODUCT DEVELOPMENTS
PROSPECTS
The smoking Tobacco category is expected to see moderate development over the forecast period. It will continue to grow thanks to increased penetration of the supermarket/hypermarket channel and the expected increasing importance of the Tobacco specialist channel. Smoking Tobacco is anticipated a volume CAGR of 2%. Over the forecast period RYO Tobacco’s contribution to overall Tobacco sales will remain small, although it is likely to benefit from the increasingly negative image of cigarettes and the growing identity of RYO Tobacco as a more ‘special’ Tobacco to smoke.
CATEGORY DATA
Table 63 Sales of Smoking Tobacco by Category: Volume 2005-2010
Table 64 Sales of Smoking Tobacco by Category: Value 2005-2010
Table 65 Sales of Smoking Tobacco by Category: % Volume Growth 2005-2010
Table 66 Sales of Smoking Tobacco by Category: % Value Growth 2005-2010
Table 67 Company Shares of RYO Tobacco 2006-2010
Table 68 Brand Shares of RYO Tobacco 2007-2010
Table 69 Company Shares of Pipe Tobacco 2006-2010
Table 70 Brand Shares of Pipe Tobacco 2007-2010
Table 71 Sales of Smoking Tobacco by Distribution Format: % Analysis 2005-2010
Table 72 Forecast Sales of Smoking Tobacco by Category: Volume 2010-2015
Table 73 Forecast Sales of Smoking Tobacco by Category: Value 2010-2015
Table 74 Forecast Sales of Smoking Tobacco by Category: % Volume Growth 2010-2015
Table 75 Forecast Sales of Smoking Tobacco by Category: % Value Growth 2010-2015