A Review of Cigarette Marketing in Canada - 5th Edition - Summer 2006

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The new Canadian tobacco market:
Cheap cigarettes, cheaper cigarettes and really cheap cigarettes

The Canadian cigarette market, once characterized by a unitary price structure, has been transformed into one where cigarettes are sold at widely varying prices.  There are several  categories of cigarettes now available in Canada.

  1. Illegal cigarettes sold from native reserves
    These sell for  as little as 10 cents each (or $20.00 for a bag of 200)

  2. Illegal cigarettes (sometimes counterfeit) imported from other countries

  3. Discount brands produced by small tobacco companies and sold in regular stores
    These sell for  about 20 - 25 cents each

  4. Roll your own tobacco or tobacco sticks manufactured by major tobacco companies
    Cigarettes manufactured from these cost about 25 cents each.

  5. Discount brands produced by major tobacco companies (the companies have two-tiers of these products)
    These sell for about about 25 - 30 cents each.

  6. So called premium brands manufactured by major tobacco companies
    These sell for about 35 - 45 cents.

Illegal Discount Brand Manufacturer "Value for Money"  BAT brand "Premium" RBH brand

The development of a legal market for discount cigarettes began about five years ago, when the major tobacco companies reduced prices to fend of competition from upstart brands made by very small manufacturers (previous to this, the three major companies had controlled virtually all the sales in Canada). The competition is now also between the major brands, each of which has a significant, if not major, part of its market in discount brands.

Although sales are declining for both 'discount' and 'premium' brands of cigarettes, the declines have been faster for premium brands, as the illustration from Rothmans Annual Report 2006 illustrates. 

Rothmans estimates that about 50% of cigarettes legally sold in Canada are in the "discount" category, up from only 6% five years ago.  According to the February 2006 YCM Report, discount brands are especially popular in Atlantic Canada and Quebec.  In Quebec, the three leading discount brands (Peter Jackson, Mark Ten and Number 7) account for 40% of cigarette sales.

For information on the best-selling discount brands and their market share, see a recent report on market share:


Sources

 

[1] ►Non Smoker's Rights Association Discount cigarettes and other cheap tobacco products

[2]►

[3]PSC Press Release. January 2005.

[4]PSC Background: Canadian retailers and cigarette promotion, 1999.

 

 


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