In what is perhaps quite remarkable consumers in the state of Israel appear to have spent during 2014 10% more on cigarettes than what they spent on dairy products, with the total amount spent on cigarettes alone in 2014 reaching NIS 8.262 billion, compared to the NIS 7.52 billion which was the total dairy sales.
In fact the growth recorded by the cigarettes market in Israel for 2014 in monetary terms amounted to 4.9%, however this does not represent an increase in sales as well. Indeed, the entire increase on the amount spent is attributed to the tax increase on cigarettes, which in turn boosted the price of a pack of cigarettes. More specifically, in quantitative terms, the cigarettes market in Israel continued to shrink last year, dropping by 3.5%, a trend that has been continuing over the past three years. What is more alarming for the Israeli tobacco companies is that the quantitative cigarette sales have now fallen by 11.2% in the past two years.
The three cigarette companies which operate in Israel are the global company Philip Morris, which holds a very high 58.9% as its market share; Globrands, which has a 27.9% share; and the local Israeli company Dubek, with a 13% share of the total market. During 2014 the first two companies managed to improve their performance, at least in monetary terms, while Dubek had another negative year to continue its bad trend, with its quantitative sales dropping by 17.4% and monetary sales decreasing by 10.2%.
Israeli consumers spent a total of NIS 4.86 billion in 2014 on the brands made by Philip Morris in Israeli, namely the Marlboro, Next, L&M, and Parliament brands. Out of the four, the Marlboro brand continues to lead the market, comfortably holding the number one position and what is more it has actually become even stronger during 2014. More specifically, a total of NIS 2.124 billion was spent by Israelites on Marlboro cigarettes, an amount which translates into 25.7% of all cigarettes sold in Israel in 2014. In fact and in marked contrast to the overall market trend, Marlboro sales grew by 7% in quantitative terms and by 14% in monetary terms in 2014.
What is very indicative of the strength and popularity of the Marlboro brand is the fact that the sales of Marlboro cigarettes in 2014 were not only double the total sales of yellow cheese, and even more impressively 3.5 times the total sales of all breakfast cereals in Israel. This brand loyalty is what made Philip Morris confident enough to decide to raise the price of the Marlboro cigarettes to retailers even when the exchange rate of shekel to US dollar was falling significantly.
As regards the other three brands made by Philip Morris, the sales of the Next brand totaled NIS 969.2 million in 2014, representing an increase of 7.4% in monetary terms and a drop of 2.8% in quantitative terms. The L&M brand recorded slightly lower sales than the previous year, which totaled NIS 928.7 million. Finally, the 2014 total sales of the Parliament brand maintained their relatively high market share, which currently stands at 10.2%, with consumer sales totaling NIS 845.2 million.
The second strongest tobacco company in Israel Globrands has three of its brands ranking among the top 10 selling brands in the country. These are the Pall Mall, Winston, and Camel brands, while the same company’s Kent and LD brands are ranked in the 11th and 12th place correspondingly. In 2014, Israeli consumers spent NIS 2.3 billion on the company’s brands, constituting a 5.9% rise in monetary sales, but a 2.6% fall in quantitative sales. Out of these, the NIS 780 million was spent on the Pall Mall brand, and the same amount on the Winston brand.
As already mentioned, Dubek in 2014 saw a decrease in both monetary and quantitative sales, however it still makes three of the 10 top selling brands in the Israeli market, namely the Time, Noblesse, and Golf brands, the sales of which all plunged by double-digit percentages in 2014.