CIGARETTE MARKET 2008

RUSSIA

ALLIANCE MAJOR

SOUTH FEDERAL DISTRICT

research by

ALLIANCE MAJORMARKET RESEARCH COMPANY

SINCE 1994

ROSTOV-ON-DONSOUTH FD of RUSSIA

www.allianc.rualliancm@aaanet.ru

GENERAL MARKET

PERFORMANCERUSSIA

CONSUMER BASE*

MALE

FEMALE

31%31%

6565%%

MALE & FEMALE

46%46%

* data of Rospotrebnadzor, early 2008

early start of

consumption*

80% of men

and 50% of women started to smoke

before they were 18

* data of Rospotrebnadzor, early 2008

RUSSIAN CIGARETTE MARKET

MATURE

growing in value faster than in

volume

SATURATED

showing distinct overproduction

KEY MARKET TRENDS

2008

SLOW-DOWN of INCOME GROWTHdriven by global financial crisis

- slower uptrade (young

consumers) or even downtrade (elder

consumers)

- reducing consumption frequency/volume

WHO FCTC accessioned by Russia in 2008

- heavier control over advertising and sales

- higher excises

- training of anti-smoking public opinion

HEALTH & WELLNESS

getting increasingly popular in Russia

- increasingly high popularity of super light offerings

especially among young female consumers

- amplified impact of anti-tobacco social programs

- alleviating of smoking takeup influence factors such as peer pressure, parental smoking and advertising

HOWEVER, IMPORTANT PSYCHOLOGICAL ASPECTS of

SMOKING- anti-stress

- indulging

make it a lasting habit hard to quit

CONSUMER PREFERENCES

in South Federal Districtof Russia

THE REVIEW IS BASED ON

PURCHASE REGISTER*

wave 1held in MARCH 2008

covered CONVENIENCE RETAIL(kiosks, independent stores, etc)

wave 2held in AUGUST 2008

covered RETAIL CHAINS(supermarkets)

* representative sample; details on sample size, geography and register methodology available on request

male59% female

41%

GENDER / AGE*

0%

20%

40%

60%

80%

100%16

-20

21-2

5

26-3

0

31-3

5

36-4

0

41-4

5

46-5

0

51-5

5

56-6

0

61-6

5

66-7

0

71-7

5

over

75

age groups

male female

* total sample wave 1; deviations in wave 2 insignificant

AGE GROUPS*

* total sample wave 1; deviations in wave 2 insignificant

0% 3% 6% 9% 12% 15%

over 75

71-75

66-70

61-65

56-60

51-55

46-50

41-45

36-40

31-35

26-30

21-25

16-20

age g

roups

CIGARETTE TYPES*

* total sample wave 1; deviations in wave 2 insignificant

0%

20%

40%

60%

80%

100%16

-20

21-2

5

26-3

0

31-3

5

36-4

0

41-4

5

46-5

0

51-5

5

56-6

0

61-6

5

66-7

0

71-7

5

over

75

age groups

super lights lights full flavor

lights26%

super lights46%

full flavor28%

CIGARETTE TYPES*

* wave 1; deviations in wave 2 insignificant

male smokers

full flavor33%

super lights38%

lights29%

female smokers

lights22%

super lights56%

full flavor22%

PRICE CATEGORIES

convenience retail

above premium

22%

value19%

medium32%

low filter5%

non filter2%

premium20%

supermarket chains

value10%

above premium

33%

premium20%

non filter0,4%

low filter2%

medium35%

PRICE CATEGORIES*

0% 20% 40% 60% 80% 100%

16-20

21-25

26-30

31-35

36-40

41-45

46-50

51-55

56-60

61-65

66-70

71-75

over 75

age g

roups

non filter low filtervalue mediumpremium above premium

* total sample wave 1; deviations in wave 2 mainly relate to

value and super premium segments however general trend is the same

KEY OPERATORS*

KT&G1%

IT/ Reemtsma3%

Donskoj Tabak5%

BAT28%

Gallaher/ JTI12%

JTI28%

Philip Morris31%

* total sample wave 2; deviations in wave 1 relate to larger shares of Gallaher and Donskoj Tabak with correspondingly smaller shares of Philip Morris, JTI and BAT

12%

8%6% 6% 6% 5% 5% 5%

3% 3% 2% 2% 2% 2% 2% 1% 1%

9%

21%

0%

5%

10%

15%

20%

25%

Win

ston

Kent

Parl

iam

ent

Marl

boro

Vogue

Chest

erfi

eld

Vir

gin

ia

Pall M

all

Bond

Allia

nce

Gla

mour

Donsk

oj Tabak

Mura

tti

LD

LM

Zolo

taja

Java

21 V

ek

Russ

kij S

til

oth

er

(17 b

rands)

KEY BRANDS*

* total sample wave 2; deviations in wave 1 relate to smaller shares of above premium, premium and some medium brands (mainly Winston) with respectively larger shares of value, low filter and most of medium brands

CHANGE OF CONSUMPTION PATTERN

earlier smoking startup;even gender distribution of

young consumer base (under 30) while in senior age groups male smokers increasingly dominate;

higher popularity of super light and light cigarettes of above premium, premium and medium price categories among young consumers (under 40).

please contact

ALLIANCE MAJORat

alliancm@aaanet.ru www.allianc.ru

CREDITSall wonderful pictures are taken from

Flickr.com great thanks to artists and their models

FOR MORE DETAILS ON THIS RESEARCH PROJECT