Tobacco in Latvia

Euromonitor International's Tobacco in Latvia market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.

Buy online to access strategic market analysis and an interactive statistical database of duty paid retail volume and value sales, illicit trade volume, company and brand shares, pricing, distribution and production data.

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Executive summary

Despite huge price rise tobacco market continues to grow in 2008

The tobacco market in Latvia has reached a turning point and is being impacted by the Tobacco Monitoring State Programme for 2006-2010, which is currently being implemented by the Latvian government. The key aims of the programme are to limit tobacco consumption by increasing unit prices to EU levels and implementing various anti-smoking campaigns. In 2008 cigarettes experienced considerable excise tax growth, which caused prices to increase significantly. However, volumes still grew as people were unable to quit smoking all at once.

Rapid rise in excise tax causes illicit market to thrive

A significant tax increase was introduced at the same time as the Latvian economy started to enter a downturn. The high rate of inflation caused consumer purchasing power to decrease considerably, while cigarette prices rose by 52% in 2008. These two factors drove growth of illicit trade, which may become a serious threat to legal tobacco sales in the near future. Although illicit trade rose dramatically by 389% in 2007, it did post a decline of 45% in 2008 as at customs there was started a stricter control of contraband attempts.

Consolidation in cigarettes following two mergers in 2008

Numerous mergers and acquisitions have taken place both globally and in the Latvian market over the last 10-15 years. On 18 April 2007 Gallaher Group Plc became a subsidiary of Japan Tobacco Inc, while in 2008 Scandinavian Tobacco SIA changed its name to British American Tobacco Latvia SIA, following the acquisition of the cigarette business of its parent company. The international tobacco company British American Tobacco (BAT) announced at the beginning of 2009 its plans to acquire the cigarette production unit of Danish company Skandinavisk Tobakskompagni. All this activity resulted in intensified competition between several international tobacco giants, and the market became more concentrated among three multinationals - Philip Morris Latvia SIA, British American Tobacco Latvia SIA and JTI Marketing & Sales SIA. The only company which has production facilities in Latvia is British American Tobacco Latvia SIA.

Tobacco specialists remain the main distribution channel

Cigars, cigarillos and smoking tobacco are distributed mainly through tobacco specialists, while the distribution of cigarettes varies. Cigarettes are mainly sold through forecourt retailers and newsagent-tobacconists/kiosks. Supermarkets/hypermarkets and discounters both increased their share in 2008. Internet retailing is neither banned nor popular in Latvia.

Market expected to decline in volume terms

The Tobacco Monitoring State Programme for 2006-2010, which aims to limit tobacco consumption, in combination with declining purchasing power and a downturn in the Latvian economy, is expected to cause volume sales to decline over the forecast period. Consumers are also expected to react to numerous anti-smoking campaigns and the popularisation of a healthy lifestyle. The number of youngsters starting to smoke should also fall while some longstanding smokers are expected to quit. However, the market’s value is still expected to rise slightly because of the planned excise tax increase and change in VAT in Latvia from 18% to 21% in 2009.

Table of contents

TOBACCO IN LATVIA : MARKET INSIGHT

EXECUTIVE SUMMARY

Despite huge price rise tobacco market continues to grow in 2008

Rapid rise in excise tax causes illicit market to thrive

Consolidation in cigarettes following two mergers in 2008

Tobacco specialists remain the main distribution channel

Market expected to decline in volume terms

OPERATING ENVIRONMENT

Smoking Prevalence

Table 1 Smoking Prevalence in Population 2003-2008

Table 2 Number of Smokers by Gender 2003-2008

Death by Cause

Table 3 Death by Cause 2004-2008

The Role and Effect of Cannabis/Marijuana

LEGISLATION

Legislative overview/ FCTC ratification

EU directives

Minimum legal smoking age

Tar levels

Health warnings

Duty paid packet marks

Advertising & Sponsorship

Smoking in public places

Litigation

TAXATION AND DUTY LEVIES

Table 4 Taxation and Duty Levies for Cigarettes

Table 5 Taxation and Duty Levies for Cigars and Cigarillos

Table 6 Taxation and Duty Levies for Pipe Tobacco

Table 7 Taxation and Duty Levies for RYO Tobacco

Table 8 Average Cigarette Pack Price Breakdown: Brand Examples

PRODUCTION/IMPORTS/EXPORTS

Table 9 Trade Statistics – Cigarettes

MARKET INDICATORS

Table 10 Illicit Trade Estimate 2003-2008

MARKET DATA

Table 11 Sales of Tobacco by Sector: Volume 2003-2008

Table 12 Sales of Tobacco by Sector: Value 2003-2008

Table 13 Sales of Tobacco by Sector: % Volume Growth 2003-2008

Table 14 Sales of Tobacco by Sector: % Value Growth 2003-2008

Table 15 Forecast Sales of Tobacco by Sector: Volume 2008-2013

Table 16 Forecast Sales of Tobacco by Sector: Value 2008-2013

Table 17 Forecast Sales of Tobacco by Sector: % Volume Growth 2008-2013

Table 18 Forecast Sales of Tobacco by Sector: % Value Growth 2008-2013

DEFINITIONS

Summary 1 Research Sources

CIGARETTES

Headlines

Trends

Distribution

Competitive Landscape

New Product Developments

Prospects

Sector Background

Cigarettes: Price Bands

Summary 2 Cigarette Price Band Definitions

Cigarettes: Menthol/standard

Cigarettes: Filter/non-filter

Cigarettes: Carbon/standard filter

Cigarettes: Filter length

Cigarettes: Slims/superslims vs regular

Cigarettes: Pack size

Cigarettes: Pack type

Sector Data

Table 19 Sales of Cigarettes by Tar Level: Volume 2003-2008

Table 20 Sales of Cigarettes by Tar Level: Value 2003-2008

Table 21 Sales of Cigarettes by Tar Level: % Volume Growth 2003-2008

Table 22 Sales of Cigarettes by Tar Level: % Value Growth 2003-2008

Table 23 Sales of Cigarettes by Price Band: % Volume Breakdown 2003-2008

Table 24 Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2003-2008

Table 25 Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2003-2008

Table 26 Sales of Cigarettes by Filter Vs Non-filter 2003-2008

Table 27 Sales of Filter Cigarettes by Carbon Vs Non-carbon 2003-2008

Table 28 Sales of Cigarettes by Length 2003-2008

Table 29 Sales of Cigarettes by Regular/Slim 2006-2008

Table 30 Sales of Cigarettes by Pack Size 2003-2008

Table 31 Sales of Cigarettes by Pack Type 2003-2008

Table 32 Cigarettes: Production, Imports and Exports: Total Volume 2003-2008

Table 33 Cigarettes Company Shares 2004-2008

Table 34 Cigarettes Brand Shares 2005-2008

Table 35 Sales of Cigarettes by Distribution Format: % Analysis 2003-2008

Table 36 Forecast Sales of Cigarettes by Tar Level: Volume 2008-2013

Table 37 Forecast Sales of Cigarettes by Tar Level: Value 2008-2013

Table 38 Forecast Sales of Cigarettes by Tar Level: % Volume Growth 2008-2013

Table 39 Forecast Sales of Cigarettes by Tar Level: % Value Growth 2008-2013

Table 40 Forecast Sales of Cigarettes by Price Band: % Volume Breakdown 2008-2013

Table 41 Forecast Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2008-2013

Table 42 Forecast Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2008-2013

Table 43 Forecast Sales of Cigarettes by Filter Vs Non-filter 2008-2013

Table 44 Forecast Sales of Filter Cigarettes by Carbon Vs Non-carbon 2008-2013

Table 45 Forecast Sales of Cigarettes by Length 2008-2013

Table 46 Forecast Sales of Cigarettes by Regular/Slim 2008-2013

Table 47 Forecast Sales of Cigarettes by Pack Size 2008-2013

Table 48 Forecast Sales of Cigarettes by Pack Type 2008-2013

CIGARS AND CIGARILLOS

Headlines

Trends

Distribution

Competitive Landscape

New Product Developments

Prospects

Sector Data

Table 49 Sales of Cigars by Subsector: Volume 2003-2008

Table 50 Sales of Cigars by Subsector: Value 2003-2008

Table 51 Sales of Cigars by Subsector: % Volume Growth 2003-2008

Table 52 Sales of Cigars by Subsector: % Value Growth 2003-2008

Table 53 Company Shares of Cigars Excluding Cigarillos 2004-2008

Table 54 Brand Shares of Cigars Excluding Cigarillos 2005-2008

Table 55 Company Shares of Cigarillos 2004-2008

Table 56 Brand Shares of Cigarillos 2005-2008

Table 57 Sales of Cigars by Distribution Format: % Analysis 2003-2008

Table 58 Forecast Sales of Cigars by Subsector: Volume 2008-2013

Table 59 Forecast Sales of Cigars by Subsector: Value 2008-2013

Table 60 Forecast Sales of Cigars by Subsector: % Volume Growth 2008-2013

Table 61 Forecast Sales of Cigars by Subsector: % Value Growth 2008-2013

SMOKING TOBACCO

Headlines

Trends

Distribution

Competitive Landscape

New Product Developments

Prospects

Sector Data

Table 62 Sales of Smoking Tobacco by Subsector: Volume 2003-2008

Table 63 Sales of Smoking Tobacco by Subsector: Value 2003-2008

Table 64 Sales of Smoking Tobacco by Subsector: % Volume Growth 2003-2008

Table 65 Sales of Smoking Tobacco by Subsector: % Value Growth 2003-2008

Table 66 Company Shares of RYO Tobacco 2004-2008

Table 67 Brand Shares of RYO Tobacco 2005-2008

Table 68 Company Shares of Pipe Tobacco 2004-2008

Table 69 Brand Shares of Pipe Tobacco 2005-2008

Table 70 Sales of Smoking Tobacco by Distribution Format: % Analysis 2003-2008

Table 71 Forecast Sales of Smoking Tobacco by Subsector: Volume 2008-2013

Table 72 Forecast Sales of Smoking Tobacco by Subsector: Value 2008-2013

Table 73 Forecast Sales of Smoking Tobacco by Subsector: % Volume Growth 2008-2013

Table 74 Forecast Sales of Smoking Tobacco by Subsector: % Value Growth 2008-2013

SMOKELESS TOBACCO

Headlines

BRITISH AMERICAN TOBACCO LATVIA SIA

Strategic Direction

Key Facts

Summary 3 British American Tobacco Latvia SIA: Key Facts

Summary 4 British American Tobacco Latvia SIA: Operational Indicators

Company Background

Production

Summary 5 British American Tobacco Latvia SIA: Production Statistics 2007

Competitive Positioning

Summary 6 British American Tobacco Latvia SIA: Competitive Position 2008

PHILIP MORRIS LATVIA SIA

Strategic Direction

Key Facts

Summary 7 Philip Morris Latvia SIA: Key Facts

Summary 8 Philip Morris Latvia SIA: Operational Indicators

Company Background

Production

Competitive Positioning

Summary 9 Philip Morris Latvia SIA: Competitive Position 2008

TABAKAS NAMS GRUPA SIA

Strategic Direction

Key Facts

Summary 10 Tabakas Nams Grupa SIA: Key Facts

Company Background

Production

Competitive Positioning