Tobacco Product Wholesaling in Australia Industry Market Research

The Tobacco Product Wholesaling industry in Australia is in decline due to falling consumption, increasing regulation, declining enterprise and establishment numbers, and a persistent decline in industry revenue. According to IBISWorld industry analyst Nick Sallmann, “smoking rates are falling in Australia due to rising public concern about the health risks of smoking, rising prices and anti-smoking campaigns designed to reduce the appeal of tobacco products”.

Increasing legislation prohibiting the consumption of tobacco products in public places, retail display bans, the introduction of plain packaging and rising excise taxes are factors plaguing the entire tobacco industry including wholesalers. It is expected that these factors combined will cause a 4.0% decline in industry revenue for 2011-12, especially as the industry continues to feel the effects of the federal government's 25% increase in tobacco excise tax introduced in April 2010.

Overall, industry revenue will have fallen at an average rate of 1.8% per annum over the past five years, totalling $2.17 billion in 2011-12. A small number of major players (i.e. the tobacco manufacturers) account for a large proportion of wholesaling activity. Sallmann adds British American Tobacco, Imperial Tobacco and Philip Morris are the largest players in the Tobacco Product Wholesaling industry. As wholesale bypass increases and consumption falls, IBISWorld estimates that the number of smaller wholesale establishments will decline over the next five years.

The Tobacco Product Wholesaling industry will continue to battle the same problems over the next five years. Government anti-smoking legislation will increase with the immanent introduction of plain packaging for tobacco products. Furthermore, anti-smoking campaigns will intensify thus increasing public concern over smoking related health risks and reducing the appeal of smoking. Industry concentration is set to indemnify as an increasing number of companies exit the industry due to the ongoing decline in revenue and consumption. Over the next five years, IBISWorld expects that industry operators will experience a 2.8% annualised decline in industry revenue, to be worth $1.88 billion in 2016-17.