Contents

I. Introduction 3

II. Why Porter’s five forces analysis. 4

III. Porter’s five forces analysis 4

1. Bargaining power of customers. 5

2. Bargaining power of suppliers. 5

3. Threat of new entrants. 6

4. Threat of substitute products. 6

5. Competitive rivalry. 7

IV. Critical aspect. 9

V. Conclusion. 10

VI. References 11

VII. Bibliography 12

I. Introduction

Tobacco has been well known and used worldwide for centuries. It is an old product which was used by our ancestors; and it knew how to go through the ages to be present in our current society. It was first considered as a healthy product and a medicine, and now it is recognized as a cause for respiratory and circulatory diseases such as cancer.
However tobacco products are still well implanted in our time. That is why I decided to study the tobacco industry in Europe; which is composed of chewing tobacco, cigar and cigarillos, loose tobacco and cigarettes. This topic is interesting because it is a current topic in our society and, in spite of all the legal restrictions; this sector is still growing up year after year. Indeed the European market grew by 2.1% in 2008 to reach a value of $172.1 billion. And this trend will continue for still few years, in 2013 the market is forecast to reach $191.9 billion, an increase of 11.5% since 2008.
Cigarettes sales represent the most lucrative for the European tobacco market, with 90.1% of the overall value, which represent $155.1 billion (Datamonitor p10).
Germany is the biggest consumer with 22% of the market’s value, followed by the United-Kingdom with 13.40%, Italy with 11.4%, and France with 11.4% as well. The rest is spread between others European countries (41.7%) (Datamonitor p 11).
Concerning the market share, three companies are sharing the market, Philip Morris International (29.7%), Imperial Tobacco Group PLC (22.7%), and British American Tobacco PLC (20%), the rest is shared by others companies (27.6%)