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Angola is a country with an increasingly robust and dynamic economy and a strongly emerging middle class, while attitudes towards tobacco use are relatively popular, suggesting high potential for tobacco sales growth. However, as the government is taking a more stringent approach to tobacco control legislation, it is likely that smoking prevalence will decline, hindering sales accordingly.
This report analyses the market for tobacco in Angola. For the purposes of the study, the market has been defined as follows:
Cigars, Cigarillos and Smoking Tobacco
Smokeless Tobacco and Vapour Products
Explanations of terminology used in this report are as follows:
GBO refers to Global Brand Owner, which is the ultimate owner of a brand.
NBO refers to National Brand Owner, which is the company licensed to distribute a brand on behalf of a GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate company.
Retail refers to sales of tobacco through retail outlets including supermarkets, hypermarkets, discounters, convenience stores, internet and other store and non-store channels, as well as sales of tobacco through bar-tobacconists and hotels/restaurants/bars.
Duty-paid retail sales are legitimate sales with tax applied to the final price.
Illicit trade refers to sales of duty-not-paid (or DNP) tobacco.
Market sizes are researched at category level, lower data levels are modelled.
Although cross-border and duty-free sales are considered legitimate, they are excluded from duty-paid sales.
Illicit trade (DNP) tobacco refers to contraband, counterfeit and unbranded tobacco, as well as illicit whites.
In past years, tobacco use played a significant role in Angolan society, although this has changed as the acceptance of smoking and tobacco use is declining. Nevertheless, the tobacco industry is important to the economy because it generates significant income for the government of Angola as well as employing numerous Angolans, both directly and indirectly. However, the Angolan tobacco industry has suffered numerous setbacks in recent years because of the passing of more stringent anti-tobacco legislation and the stricter enforcement of existing legislation.
Angola has a moderate smoking prevalence and in 2013 16.7% of adult men and 1.6% of adult women used tobacco daily. While male smoking prevalence has remained steady in recent years, female smoking prevalence is declining.
One area of concern for the Angolan authorities is the country’s rising youth smoking prevalence. In recent years, many teenage boys aged up to 15 years old have started to experiment with tobacco, especially in combination with liamba (cannabis). This has led to various governmental and non-governmental organisations to intensify their campaigns to fight against cigarette smoking, and these are often tied to anti-cannabis campaigns.
There are several anti-tobacco organisations active in Angola, including the National Institute for the Fight Against Drugs (INALUD). The efforts of INALUD have had a significant impact on the fight against drug use, especially the abuse of tobacco and alcohol. The organisation has campaigned hard against the manufacture of tobacco products in Angola and it has also encouraged the authorities to enforce the legislative ban on the sale of tobacco products to persons below 18 years of age. Moreover, INALUD has ensured that the government and other relevant parties uphold the law prohibiting smoking in public places, as well as the bans on the advertising and marketing of both tobacco and alcoholic drinks in Angola.
Angola’s leading cigarette manufacturers are consistently developing new variants of their existing brands, mainly involving cigarettes with new features and new packaging formats. For example, 2016 saw SL introduce SL Menthol with a new cover packaging. In Angola, consumers in general and cigarette smokers in particular are not often interested in regularly switching between products brands, and this includes a general reluctance to try new products. For example, consumer interest in SL’s new launches during 2015 and 2016 was minimal, at least until the original SL was withdrawn from sale.
Competition among cigarette brands, legislation and premiumisation in an attempt to appeal to various different demographic groups have long been the main factors behind innovation in the Angolan tobacco industry. More recently, however, it has been changes in legislation that have provided the greatest impetus for innovation.
Angola’s tobacco industry is set to experience significant declines in value sales over the forecast period, and this is due to the double-digit annual sales declines expected in the dominant category of cigarettes. Nevertheless, in volume terms, cigarettes is expected to record modest positive annual growth over the forecast period and this somewhat contradictory performance is expected to be due to stable demand and falling unit prices.
Volume sales of fine cut tobacco are set to increase substantially from 4.8 tonnes in 2016 to 8.3 tonnes in 2021 as increasing numbers of smokers are expected to turn to fine cut tobacco as an alternative to cigarettes, while retail volume sales of pipe tobacco are set to rise from 236.1 tonnes in 2016 to 268.2 tonnes in 2021 due to the increasing popularity of smoking traditional Middle Eastern water pipes such as shisha and argileh among Angola’s young urban consumers.
Income level does not generally determine consumer choice when it comes to cigarettes. People tend to buy the brands they prefer as all cigarettes are generally affordable for the vast majority of Angolans. The main reason for this is that if one cannot afford to purchase a carton or even a pack of cigarettes, they can simply resort to purchasing single sticks, which can retail for as low as AOA20-30.
Nevertheless, cigarettes and other tobacco products are slowly becoming less affordable for the majority of Angolans. The main reason for this is the consistent increases which have been seen in the taxation regime for tobacco products in the country in recent years, coupled with the economic crisis and the passing of new legislation, which has led to reductions in the numbers of tobacco traders and distributors and increases in the retail prices of tobacco products.
The only truly aspirational aspect of tobacco use among the population of Angola is the smoking of cigars as a signifier of high income and elevated social status, as these products are simply unaffordable for the majority of Angolans. However, there is also a marked preference for more expensive cigarette brands among upper/middle-income and high-income consumers.
Angola has a young population, with a median age of just 18.2 years in 2015, although the country’s average life expectancy is low, standing at just 52.7 years in 2015. Moreover, the country’s population is growing quite strongly, rising by 2% per year, and this is mainly due to the high birth rate of six births per woman, on average. This demographic data suggests favourable ground for the development of the country’s tobacco industry in the future. Moreover, the strong growth being seen in Angola’s middle income class suggests that strong growth potential for tobacco sales due to the emergence of a more affluent consumer base for these products, especially with the anticipated emergence of new types of tobacco products such as vapour products.
Tobacco products, especially cigarettes, are widely distributed in Angola and consumers do not have to search very hard or travel very far to find them. Forecourt retailers remains the leading distribution channel for cigarettes in the country, accounting for almost half of volume sales in the category, while kiosks is the other major distribution channel for cigarettes in Angola. Kiosks also dominate the distribution of pipe tobacco and fine cut tobacco, leaving a small proportion of sales to independent small grocers. The distribution of cigars and cigarillos, meanwhile, is split fairly evenly between on-trade outlets and street vendors.
No major shifts between any of these distribution channels are expected in the future, although sales of cigars through on-trade outlets are expected to rise, at the expense of street vendors.
After the Angolan Government banned the local production of cigarettes, some reductions have been seen in the penetration of illicit cigarettes in the country. The importation of cigarettes is handled by leading global tobacco companies such as British American Tobacco and Japan Tobacco as well as major local players such as Barco Trading and Angoalissar, which has helped to stamp out the contraband tobacco trade because the involvement of these conscientious legitimate companies has left clandestine cigarette importation in the hands of individuals.
However, there remains a certain level of cigarette smuggling among Angola’s Chinese communities. Many of the Chinese people living in the country smoke cigarettes illicitly imported from China and is unclear how much control the government has on the clandestine importation of these Chinese cigarettes.
The twin bases of Angola’s illicit cigarette trade are poor border controls and endemic corruption among customs officials. In fact, there are major entry points into Angola on the country’s borders with DR Congo, Namibia and Zambia that are not under the full control of the government. Another major factor is the pressure coming on the disposable incomes of many people in the country, not least as reports have stated that lower-income communities are also the major consumers of tobacco products.
Angola’s illicit cigarette trade comprises entirely smuggled products and this is due to the absence of local production and weak border control due to corruption. Angola is not currently a source of illicit cigarettes smuggled into other countries.
There is no legally mandated minimum legal smoking age in Angola; however, it is forbidden to provide tobacco products to anyone under the age of 18.
Youth smoking prevalence remains relatively low in Angola and 3.2% of underage boys and 0.3% of underage girls were using tobacco daily in 2013, according to World Health Organisation statistics. It has been reported that many Angolan youths start to experiment with tobacco as early as 14 years of age. This presents concerns for Angolan society and few people support such behaviour. As the general public of Angola are becoming increasingly aware of the health dangers presented by tobacco use and the links between underage smoking, liamba (cannabis) consumption and juvenile delinquency, youth smoking has become a major public issue.
There are currently no limits in place limiting tar levels in cigarettes sold in Angola. In addition, there is no requirement for tar or nicotine levels to be printed on tobacco packaging. As a result, most smokers do not pay particular attention to the tar levels of their favourite cigarette brands.
2017 saw the approval of a new advertising law by the Angolan parliament which will ban all types of tobacco advertising. Prior to this, there were no restrictions at all on advertising cigarettes and other tobacco products in the broadcast, print, outdoor and online media. The effects of the impending legislative ban can be observed in the gradual disappearance of billboards advertising the cigarette brands of market leader British American Tobacco. Furthermore, most retail outlets selling tobacco products are removing any materials that promote and market cigarettes and any other tobacco products.
The impending law banning media advertising of tobacco products is also set to make it illegal for tobacco companies and cigarette brands to sponsor sports and cultural events and sports teams and clubs, among other entities.
There is no requirement for health warnings to be printed on tobacco packaging in Angola, according to the World Health Organisation’s report on the global tobacco epidemic.
Smoking has been banned in many public places in Angola since 2009, including all healthcare, educational and government facilities and all public transport facilities and vehicles. The general population is becoming more aware of the ban on smoking in public and this has had significant impact in terms of reducing the incidence smoking in public places.
Taxation and duty levies
Presidential Legislative Decree No5/15 of 21 September 2015 saw the Angolan government increase the excise tax due on cigarettes from 30% to 80%. This is among the highest tobacco excise duties in Africa. In addition, all tobacco products sold in Angola attract sales tax of 10%.
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Chart 1 Tobacco in Angola in 2016 Chart 2 Angola Socioeconomic Trends
Taxation and duty levies
Chart 3 Cigarettes: Traditional Retailer Chart 4 Cigarettes: Traditional Retailer Chart 5 Cigarettes: Hotel/Restaurant/Bar Chart 6 Cigarettes: Modern Retailer
Table 1 Sales of Tobacco by Category: Volume 2011-2016 Table 2 Sales of Tobacco by Category: Value 2011-2016 Table 3 Sales of Tobacco by Category: % Volume Growth 2011-2016 Table 4 Sales of Tobacco by Category: % Value Growth 2011-2016 Table 5 Forecast Sales of Tobacco by Category: Volume 2016-2021 Table 6 Forecast Sales of Tobacco by Category: Volume 2016-2021 Table 7 Forecast Sales of Tobacco by Category: Value 2016-2021 Table 8 Forecast Sales of Tobacco by Category: % Volume Growth 2016-2021 Table 9 Forecast Sales of Tobacco by Category: % Value Growth 2016-2021
Chart 7 Cigarettes: Modern Retailer (1) Chart 8 Cigarettes: Modern Retailer (2) Chart 9 Cigarettes: Traditional Retailer (1) Chart 10 Cigarettes: Traditional Retailer (2)
Table 10 Sales of Cigarettes: Volume 2011-2016 Table 11 Sales of Cigarettes by Category: Value 2011-2016 Table 12 Sales of Cigarettes: % Volume Growth 2011-2016 Table 13 Sales of Cigarettes by Category: % Value Growth 2011-2016 Table 14 Forecast Sales of Cigarettes: Volume 2016-2021 Table 15 Forecast Sales of Cigarettes by Category: Value 2016-2021 Table 16 Forecast Sales of Cigarettes: % Volume Growth 2016-2021 Table 17 Forecast Sales of Cigarettes by Category: % Value Growth 2016-2021 Table 18 NBO Company Shares of Cigarettes: % Volume 2012-2016 Table 19 LBN Brand Shares of Cigarettes: % Volume 2013-2016 Table 20 Sales of Cigarettes by Distribution Format: % Volume 2011-2016 Summary 1 Cigarettes Pricing
CIGARS, CIGARILLOS AND SMOKING TOBACCO
Table 21 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Volume 2011-2016 Table 22 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Value 2011-2016 Table 23 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Volume Growth 2011-2016 Table 24 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Value Growth 2011-2016 Table 25 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Volume 2016-2021 Table 26 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Value 2016-2021 Table 27 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Volume Growth 2016-2021 Table 28 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Value Growth 2016-2021 Table 29 NBO Company Shares of Cigars and Cigarillos: % Volume 2012-2016 Table 30 LBN Brand Shares of Cigars and Cigarillos: % Volume 2013-2016 Table 31 Distribution of Cigars and Cigarillos by Format: % Volume 2011-2016 Table 32 Distribution of Smoking Tobacco by Format: % Volume 2011-2016 Summary 2 Cigars, Cigarillos and Smoking Tobacco Pricing
SMOKELESS TOBACCO AND VAPOUR PRODUCTS
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