全球煙草業(yè)：吸煙者調(diào)查顯示美國卷煙銷量預(yù)期上升

1、GlobalResearch26 November 2019Global TobaccoUBSEvidenceLabinside:smokersurveysuggests upsidetoexpectationsforUScigarettevolumesSurveying 1,000 US smokers to understand US volume declinesIncontextofrecordUSvolumedeclines,thereissignificantdebateinthemarketabout the cause is it price increases, e-ciga

2、rettes, or something else? We use the 4th UBS EvidenceLabsurveyof1,000UStobaccouserstoshedlightontheissue.Wealsocover price elasticity, discount brand traction, consumer response to a menthol ban, and brand equity. In our view, the survey supports the perspective that recent e-cigarette category wea

3、kness means cigarette volumes can outperform Altrias 4-6% guidance rangenextyear,andthemarketcansupportcurrentlevelsofpricingifitneedsto.No evidence here of increasing cigarette price elasticityThereissignificantdebateaboutwhatisdrivingthevolumedeclinesandwhetherprice elasticityhasincreased.Versusth

4、elastsurveyinDecember2017,wefindnoevidence to indicate that price elasticity has changed (Altria say it is -0.3). Furthermore, the importance placed on price by consumers appears to have stabilised, and discount brandshavefailedtogainawareness,reducingdownsidetopriceincreases.Survey says e-cigarette

5、s have impacted volumes but not behaviourFurthermore,ouranalysisindicatesthate-cigaretteshavebeenakeydriverofvolume declinesoverthelast2years,whichisconsistentwithourlatestquantmodel.Ifthisis thecase,italsomeansonecouldexpectimprovedvolumesnextyearife-cigarettesales continue to fall / do not grow. F

6、urthermore, in our view the survey reveals that dual users of e-cigarettes are fundamentally different consumers to exclusive cigarette smokers.Theyplacelessimportanceonprice,arelesslikelytoswitch,andarefarmore likelytoshoparound,evenwhencontrollingforage.Wethereforetentativelyconclude e-cigarettes

7、are not having an impact on cigarette price elasticity they are just appealing to different consumers.Positive read for the tobacco companiesTheindustrylevelresultsarepositiveforMO,BATandIMB;3-4%volumedeclinesand 2019 levels of pricing would be a material tailwind to earnings. From a net promoter sc

8、oreperspective,Imperialsbrandshaveimprovedthemostsinceourlastsurvey.TobaccoGlobalEquitiesNik Oliver, ACATobaccoGlobalEquities HYPERLINK mailto:nik.oliver +44-20-75684982Robert Rampton HYPERLINK mailto:robert.rampton +44-20-75682014Robert Krankowski AssociateAnalyst HYPERLINK mailto:robert.krankowski

9、 +44-20-75681152Charles Eden,ACA HYPERLINK mailto:charles.eden +44-20-75689622Kate Rusanova HYPERLINK mailto:kate.rusanova +44-20 75689285Figure1:LimitedevidenceofhigherpriceelasticityFigure2:Dualusersaredifferentsay low price is somewhat or very important20192017Sep-19More importance on low pricesa

10、y low price is somewhat or very important20192017Sep-19More importance on low pricePay more cigarettes90%80%70%Try new brands of cigarettes frequently / very frequentlyExclusiveDual 25%20%15%60%50%40%$3$3-4$4-5$5-6$6-7$7-8$8-9$9-10$10+10%5%0%21-3435-4445-5455+Price paid for pack for cigarettesSource

11、: UBSEvidenceLabSource: UBS EvidenceLab HYPERLINK /investmentresearch /investmentresearchThis report has been prepared by UBS AG London Branch. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ONPAGE33. UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshould

12、be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.ContentsThesisinpictures3 HYPERLINK l _TOC_250021 What does thissurveycover?6 HYPERLINK l _TOC_25

13、0020 US tobaccomarketcontext7 HYPERLINK l _TOC_250019 Profiling theUSsmoker9 HYPERLINK l _TOC_250018 What drives US cigarettebrandselection?9 HYPERLINK l _TOC_250017 What can we infer aboutprice elasticity?10 HYPERLINK l _TOC_250016 Deep discountbrandtraction12 HYPERLINK l _TOC_250015 What is this i

14、ssue?12 HYPERLINK l _TOC_250014 What does thesurveyshow?13 HYPERLINK l _TOC_250013 E-cigarettes andpriceelasticity15 HYPERLINK l _TOC_250012 Dual users arefundamentallydifferent17 HYPERLINK l _TOC_250011 end e 18 HYPERLINK l _TOC_250010 Impact of e-cigarettesonvolumes20 HYPERLINK l _TOC_250009 Impac

15、t of e-cigarettes on persmokerconsumption20 HYPERLINK l _TOC_250008 Impact of e-cigaretteson prevalence24 HYPERLINK l _TOC_250007 What this says about thequantmodel(s)26 HYPERLINK l _TOC_250006 Mentholban27 HYPERLINK l _TOC_250005 Cigarettebrands28 HYPERLINK l _TOC_250004 What is the current consume

16、r view of UScigarettebrands?28 HYPERLINK l _TOC_250003 Which brands score well onthesefactors?29 HYPERLINK l _TOC_250002 Altria29 HYPERLINK l _TOC_250001 British American Tobacco30 HYPERLINK l _TOC_250000 Imperial brands31Nik Oliver, ACA HYPERLINK mailto:nik.oliver +44-20-75684982Robert Rampton HYPE

17、RLINK mailto:robert.rampton +44-20-75682014Robert Krankowski AssociateAnalyst HYPERLINK mailto:robert.krankowski +44-20-75681152Charles Eden,ACA HYPERLINK mailto:charles.eden +44-20-75689622Kate Rusanova HYPERLINK mailto:kate.rusanova +44-20 75689285GlobalTobaccoUBSResearchThesis in pictures UScigar

18、ettesAdjusted operating profit split (%)UScigarettesOtherUStobaccoRest of the 100%90%80%0%BATMOIMBThe US is the single most important market for the listed tobacco sectorUnderlying industry volume change (%)1%0%-1%-2%-3%-4%-5%-6%?1Q123Q121Q131Q123Q121Q133Q131Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q

19、193Q19Industry volume declines have reached record levels, but some question whether they have inflectedHowlonghaveyoubeensmokingyourmaincigarettebrand?Dec-17Sep-193%(all cigarettesmokers) Dec-17Sep-193%45%40%35%30%25%20%15%10%5%0%The volume declines have led people to question whetherpriceelasticit

20、yhaschangedwefindlittle evidence of increasedswitchingLessthanyear1 - 2 years 3 - 5 years 6 - 10 years More than10 yearsNot sure / Cant rememberPrice paid versus importance placed on low price% who say low price is somewhat or very important20192017Sep-19More importance on low priceSep-19More import

21、ance on low pricePay more cigarettes90%80%70%60%50%40%$3$3-4$4-5$5-6$6-7$7-8$8-9$9-10$10+If anything, there is evidence that the importance of price has actually fallenPrice paid for pack for cigarettes Sources for above: UBS estimates, UBS Evidence Lab, company data.Thesis in pictures Impact of e-c

22、igarettesSummary of how we estaimte volume impact$sales(mn)As a % of cigarettes0$sales(mn)E-cigshare(%,10%9%8%7%6%5%4%3%2%1% The e-cigarette category has grown dramatically. Our analysis of the survey results suggests this has been a 2- 7ppt headwind to volumes over 2 years.(note: Nielsen covered ch

23、annels only)Summary of how we estaimte volume impactUse profileDual+ user,not not 9%Cigarette 47%Inoursurvey,closetohalfweredualusers.Dual+users44%Try new brands of cigarettes frequently / very frequentlyExclusiveDual 25%20%15%10%We find that dual e-cigarette users are just fundamentally different t

24、o exclusive cigarette users (shop around shown)5%0%21-3435-4445-5455+Price paid versus importance placed on low price% who say low price is somewhat or very importantDualusersExclusiveMore importasMore importasforPaymore cigarettepriceon lownce90%80%70%60%50%40%20 cigs per week)0780590274262Cigarett

25、es590274262Source: UBS Evidence LabThe questions were broad in scope. In this note, we tried to use the survey to analyse the following highly relevant topics to the listed tobacco companies:USsmokerbehaviour(page HYPERLINK l _bookmark3 9):whatdrivesbrandselection?Critically,has price elasticity cha

26、nged (it doesnt look likeit).Discount brand traction (page HYPERLINK l _bookmark9 12): over the last 3 years, deep discount brandshavegrowninimportance.Nothinginthissurveysuggestsamaterial change in current trajectories (positively ornegatively).The impact of e-cigarettes on price elasticity (page H

27、YPERLINK l _bookmark17 15): a recurring question given the volume declines is whether e-cigarettes have impacted priceelasticity.Basedonouranalysisofthesurveyresponses,itappearsno.Impact of e-cigarettes on volumes (page HYPERLINK l _bookmark28 20): this is particularly relevant now for the volume ou

28、tlook. Some argue that the logic now follows that the larger the impact it has had, the better volumes should be next year (as e- cigarettesaleshavefallensharplyfrompeaksandcontinuetodoso).What would consumers do if there was a menthol cigarette ban (page HYPERLINK l _bookmark42 27)? Versus when sim

29、ilar questions were asked back over 2010-12 (by 3rd parties), now the most common response is to trye-cigarettes.How tobacco company cigarette brands screen (page HYPERLINK l _bookmark44 28): Imperial has made the most progress.ThedatasetisavailableontheUBSEvidenceLabportal.Weacknowledgethese are di

30、fficult topics to address, and that there may be other ways of interpreting / cutting the data to gain additional insight into them. Let us know if you have different questions of the data. If not covered in this note, we may publish an update at a later date addressing them.US tobacco market contex

31、tThe US the single most material tobacco marketTheUSrepresents8%ofglobalexChinavolumes.However,revenueperstickis muchhigher,asaremargins.Asaresult,UStobaccocontributes25-100%ofBAT, MO and IMB profits HYPERLINK l _bookmark0 (Figure 4). Furthermore, we note a tendency in the marketto extrapolate curre

32、nt volume environment, increasing the importance of the US market to the overall industry valuations HYPERLINK l _bookmark1 (Figure5).Figure4:TheUSiscriticaltosectorprofitFigure 5: Volumes drivesentimentAdjustedoperatingprofitsplit(%)1yearforwardPErelative(%)Year on year volume changes(%)UScigarette

33、sOtherUStobaccoRest of the 100%90%80%70%60%50%40%30%20%10%0%BATMOIMB20%0%-10%-20%-30%-40%-50%-60%AltriaPEreltoUSAStaplesS)US(RHumS)es08 09 10 11 12 13 14 15 16 17 18 193%0%-3%-6%-9%-12%Source:UBSestimates,companydataSource: UBS estimates, company data, Reuters DataStream,consensusInthisnoteweanalyse

34、thesurveydatatodrawconclusionsaboutthekeydebates discussed below.Volumes have been getting worse but are they inflecting?Over the course of the year, volume expectations were revised downwards by Altria from -3.5% to -5% to -5% to -6%. This would be the highest recorded (outsidefederalexcisetaxincre

35、aseyears),andhelpsexplainalargeportionofthe current valuation discount.However,at3Q19volumedeclinesmoderatedby50bps,andsomehavestarted (including us) to expect this is an inflection point. Whether or not this is the case depends very much on what drove the declines in the firstplace.Figure 6: 5-6% i

36、s high in ahistoriccontextFigure7:3Q19sawaslightlyimprovementinthetrendUS industry volume declines (%)% changeinvolumes 2019E6%4%2%0%-2%-4%-6%-8%19601963196619601963196619691972197519781981198419871990199319961999200220052008201120142017Underlying industry volume change (%)Industry volume declines1%

37、0%-1%-2%-3%-4%-5%?-6%1Q123Q121Q131Q123Q121Q133Q131Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q193Q19Source: FTC, Euromonitor, company data, UBSestimates.Source: Company dataMany reasons cited for the declineOur latest quant model implies that the step up in current declines have been driven by the grow

38、th of e-cigarettes (our view has changed here), as shown in HYPERLINK l _bookmark2 Figure 8. Altrias own analysis paints a similar picture. If this is indeed the case, then it stands to reason that the current decline should moderate.Figure 8: Our Quant model indicates e-cigs have been a 3- 4ppt hea

39、dwind to volumes recentlyFigure 9: However, gas prices have not fallen as much as expected, and cigarette prices have increasedDrivers of volume growth y/y (%)*Gas pricey/y(%)Tobacco prices y/y(%)4%3%2%1%0%-1%-2%-3%-4%-5%2017201820192017201820192020E1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4QE1QE2QE3QE4QEGDPGaspricesC

40、igpricesE-cigsError35%30%25%20%15%10%5%0%-5%-10%-15%Gasprices(LHS)Cigarette prices(RHS)9%Cig price (RHS)Gas price (LHS)Cig price (RHS)Gas price (LHS)7%6%5%4%3%2%1%Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-190%Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul

41、-19Oct-19Source:UBSEvidenceLabDataScience.Note:-3.4%interceptnotshown.Source: Haver, UBSHowever, this year has also seen an unprecedented 3 price increases, and gas priceshavebeenmorerobustthanexpectedlastyear.IntheviewofBATandIMB, these have been the key factors, and e-cigarettes have only been a 5

42、0-130bps headwind. If they are correct, then there is less upside to cigarette volume expectations(althoughitwilldependonhowmuchpriceAltriadecidestotake).Market share evolutionsWhile currently the industry volume outlook is dominating the debate and valuation,marketshareisfarfromstatic.Sinceourlasts

43、urveyinDecember2017, deep discount cigarettes (which the companies under index to) has continued to gainshareattheexpenseofthetobaccomajors,threateningindustryprofitinthe eyes of some.Figure 10: The tobacco majors have lost share to deep discountChange in volume market sharesinceDec-16(%) AltriaReyn

44、olds(BAT)Imperial 2.5%OtherIMBOtherIMBAltriaBAT1.5%1.0%0.5%0.0%-0.5%-1.0%-1.5%Jan-16Dec-16Dec-17Source: NielsenProfiling the US smokerWhat drives US cigarette brand selection? HYPERLINK l _bookmark4 Figure 11 shows what drives smoker brand selection. The results of the 2019 survey are consistent wit

45、h the findings in prior surveys. Taste, availability and qualityremainthetop3drivers,andsimilarimportanceisplacedoneach.Theone difference is that the growth in the importance placed on low price has stopped and it actually declined in the latestsurvey.Figure 11: No material change in preferences exc

46、ept price less importantHow important are each of these criteria?% csg ery rtat r sewatrtatY19Y17Y16Y15Low price is no longer rising in importanceHaspleasingtasteorflavor91%94%95%97%Easily available89%92%91%91%High quality product76%84%86%87%91%Low pricePremium brand69%80%77%Domestic USbrandBrandIli

47、ketobeassociatedwith45%42%43%56%56%60%71%69%Frequently promoted at storesOffers healthier productsAttractive cigarettes or packaging26%22%26%41%42%43%40%36%33%38%36%52%Good advertising21%18%23%31%International/imported brand13%10%12%10%0%27%40%60%80%100%Source: UBS Evidence LabWhat can we infer abou

48、t price elasticity?Withpriceincreases(foryearswithoutstateexcisetaxincreases),recordvolume declines,andthegrowthofthedeepdiscountsector,arecurringinvestorquestion is whether price elasticity haschanged.Figure 12: Rising prices and increasing volume declines have led many to ask whether price elastic

49、ity has deteriorated?Priceincreasesarecentraltothe businessmodelTobacco price inflation (%)Industry volume declinesTobacco price inflation (LHS) Industry volume declinesTobacco price inflation (LHS) (RHS,reversed)7%6%5%4%3%2%1Q122Q121Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q151Q1

50、62Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q181Q192Q193Q19TobaccopriceinflationIndustry volumedeclinesIndustry volume declines-7%-6%-5%-4%-3%-2%-1%0%Source: UBS estimates, company data, Haver.The tobacco companies reject that conclusion, arguing accelerated volume declines are a function of gas price

51、s, macro factors, and e-cigarettes (with the companies disagreeing with the contribution of each).Limited change in behaviourWe did not find anything in the survey to indicate that price elasticity had changed. For instance, churn remains unchanged; HYPERLINK l _bookmark6 Figure 13 shows very limite

52、d changesinhowlongsmokershavebeenusingtheirmainbrand. HYPERLINK l _bookmark7 Figure14shows no change to how often smokers try new brands.Figure13:LimitedchangeinchurnFigure 14: No change in shoparoundHowlonghaveyoubeensmokingyourmaincigarettebrand?(all cigarette smokers)How often do you try new ciga

53、rette brands?(all cigarette smokers)50%45%40%35%30%25%20%15%10%5%0%LessthanyearDec-17Sep-191 - 2 years 3 - 5 years 6 - 10 years More than10 yearsNot sure / Cant remember50%45%40%35%30%25%20%15%10%5%0%Very frequentlyDec-17Sep-19Frequently OccasionallyRarelyNeverSource: UBSEvidenceLab.Note:Thetrendist

54、hesameifwelookattheUSexthe WestCaliforniawasdrivingallthepriceincreasesshownin HYPERLINK l _bookmark5 Figure12inDec-17.Source: UBSEvidenceLab.Note:ThetrendisthesameifwelookattheUSexthe WestCaliforniawasdrivingallthepriceincreasesshownin HYPERLINK l _bookmark5 Figure12inDec-17.We also observe that th

55、e relationship between price paid for a pack of cigarettes andtheimportanceplacedonlowpricehasmovedinadirectionthat,ifanything, would imply price sensitivity has declined (if price elasticity had increased, we would expect the curve to havesteepened).Figure15:Importantofpricehasdecoupledfrompricepai

56、dthisdoesnot supporttheviewthatpriceelasticityhasincreased%whosaylowpriceissomewhatorvery importantSep-19Dec-17Sep-19Dec-172019201790%80%70%60%50%40%20 per week16% 44%16%As we will show, at a headline level, dual users self-report having switched cigarette brands more recently and trying new brands

57、more often. However, we do not detect an increase in overall sample switching and brand trial despite the increase in dual use (from 16% to 44% - HYPERLINK l _bookmark18 Figure 26). This implies consumers are switchingbetweenbuckets,ratherthanchanging,inourview.Furthermore,these observations hold wh

58、en we control for age, and dual users place less relative emphasis on lower price.No impact on switching HYPERLINK l _bookmark19 Figure27showsthatonaheadlinelevel,dualusersswitchmore.However, HYPERLINK l _bookmark20 Figure HYPERLINK l _bookmark20 28 shows sample levels have not changed (if anything

59、gone down), despite the increase in dual use.Dec-17 Source: UBS Evidence Lab.Sep-19Figure27:DualusershaveswitchedmorerecentlyFigure 28: but total sample switching has gonedownHow often do you try new or different brands of cigarettes? Oct-19VeryfrequentlyFrequentlyOccasionallyRarelyNeverCigaretteuse

60、rswhoalsouseE- cigarettesExclusive Cigarette Users0%20% 40% 60% 80% 100%How often do you try new cigarette brands? (all cigarette smokers)VeryfrequentlyFrequentlyOccasionallyRarelyNeverSep-19Dec-170%20%40%60%80%100%Source: UBSEvidenceLabSource: UBS EvidenceLabWealsoobserve(notshown),thatbothdualuser