The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.
If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE!
New Report Guarantee
If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE!
The future appears bleak for tobacco. Most consumers disapprove of smoking and are keen to prevent passive smoking, with smokers feeling pressure to quit. Those that do smoke are shifting to low-priced illicit cigarettes. Illicit trade is strong and growing due to porous borders and large organised crime gangs, with retail volume declining. A small and stagnant population and well-enforced public smoking ban will also hinder sales, while future tax increases are also likely.
This report analyses the market for tobacco in El Salvador. 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.
Attitudes towards tobacco are increasingly negative in El Salvador. Most consumers are well aware of the health risks of smoking and passive smoking, due to vigorous anti-smoking campaigns. The high level of illicit trade also results in numerous media articles linking cigarette smuggling to the funding of gang violence, with this further contributing to a negative image for smoking. There is thus considerable pressure on many smokers to quit. The fact that tobacco is not produced within the country and that many products are sold without paying tax also means that tobacco is viewed as contributing little to the wider economy. Indeed, many feel that tobacco has a negative impact on their country's economy due to creating burdens on the healthcare system and the role of illicit cigarettes in funding organised crime.
Smoking prevalence declined during the review period. This was linked to Ministry of Health anti-smoking campaigns and the public smoking ban and mandatory graphic health warnings introduced at the start of the review period. According to 2014 data from the government, 57% of smokers stated that they had considered quitting as a result of graphic health warnings.
According to the government's 2014 survey, 65% of over 18-years-old had never smoked. Only 9% over 18-years-old were current smokers, with an average consumption of just four cigarettes/day. Smoking prevalence is considerably higher among men than women. According to the government's 2014 data, an impressive 84% of over 18-year-old women had never smoked, in comparison to just 41% of men. While 17% of over 18-year-old men smoked, only 2% of over 18-year-old women did so. Those women that do smoke are also more likely to be only occasional smokers.
Fosalud (Solidarity Fund for Health) is the main anti-smoking organisation in the country, with this being a government body attached to the Ministry of Health. This organisation received international recognition at the Latin American and Caribbean Tobacco or Health Congress in 2017 for its effective implementation of the 2011 public smoking ban. The organisation notably offers an anonymous complaint line and encourages consumers to inform on outlets where the public smoking ban is being ignored.
Fosalud also operates CPTA (Centers for Addiction Prevention and Treatment) outlets offering smoking cessation assistance. This programme appears effective, with a 70% quit success rate in 2016. However, only 292 smokers took part in the programme during the year. Asociación de Ex Fumadores de El Salvador (Association of Ex-Smokers of El Salvador) also offers support for people who want to quit smoking.
There was no significant new product development towards the end of the review period, partly due to the fact that no tobacco products are made in the country. Cigarette players mainly focus on ensuring wide availability and affordable prices for established brands. Declining retail volume sales, a marketing ban and strong competition from illicit trade are deterring players from investing in introducing new launches. El Salvador's small population and widespread poverty also prevent this country from being viewed as a strategic location for investment in innovation. Tobacco specialists often pride themselves on offering the latest launches in cigars and cigarillos, although these niche products generally attract only high-income cigar enthusiasts and have little impact on overall tobacco sales.
The future appears bleak for tobacco in El Salvador in the forecast period, with an expected 6% value decline at constant 2016 prices worse in comparison to the 1% review period decline. Sales are likely to be impacted on two fronts. Firstly, ongoing anti-smoking campaigns will result in many consumers cutting back or quitting, while the public smoking ban and consumer concerns about passive smoking will make it more difficult for many to smoke. These trends will impact cigars, cigarillos and smoking tobacco most, with enjoying a leisurely cigar or pipe smoke increasingly difficult and these products set to see a 9% value decline over the forecast period. These products will also be hit hardest by rising health-consciousness, which is likely to be strongest among more affluent groups.
On the other hand, those that do smoke will continue to be attracted by lower-priced illicit cigarettes. While retail volume sales of cigarettes are expected to see a further 3% drop in the forecast period, illicit trade volumes will rise by around 6%. This will be considerably slower in comparison to the 33% growth seen during the review period, thanks to the intensifying efforts of the police and the Crime Stoppers organisation. However, porous borders and powerful organised crime gangs will continue to result in illicit trade growth. Retail volume sales of cigarettes could also be hit by tax increases in the forecast period, following the country's ratification of the WHO's FCTC. This may bolster value growth to an extent but is likely to result in a sharper retail volume decline as price-sensitive consumers shift to illicit trade.
Low- to mid-income men are the main consumer groups for cigarettes in El Salvador. Low-income men are most likely to buy illicit cigarettes, due to these products' lower prices and also the ongoing availability of single-stick sales from illicit street vendors. Single-stick sales have been illegal since 2011, with the minimum legal pack size set at 10 sticks. When buying legal products, these consumers continue to opt for the most affordable options, such as economy brand Delta.
Price-sensitive mid-income men are more likely to buy lower-mid-priced brands such as Diplomat, although upper-mid-income consumers are often attracted by global brands such as Marlboro. Marlboro also attracts high-income smokers, as does premium brand Dunhill. Demand for cigars and cigarillos is largely limited to high-income smokers, due to these products' high prices. However, mid-income consumers may also opt for cigars and cigarillos as an occasional treat, such as when celebrating.
Tobacco use is not generally viewed as aspirational. Cigars and cigarillos are expensive and thus seen as status symbols, although most consumers view the smoking of any tobacco product in a negative light. Many consumers increasingly link cigarettes with organised crime, due to strong publicity over the country's high volume of illicit sales. Many also link smoking with antisocial behaviour, partly due to illicit trade but also due to concerns over people flouting the smoking ban. The public smoking ban is widely supported and many are concerned about the impact of passive smoking on the nation's health.
El Salvador has a very small population, reaching just over six million in 2016, with this number seeing little growth over the review period. The population continues to be impacted by ongoing high migration from the country, with many leaving due to concerns over rising crime and gang violence and also due to economic concerns. This small population and minimal population growth is likely to constrain sales growth for tobacco in the forecast period.
The country had a median age of 26 years at the end of the review period, with a fairly young population. This benefits tobacco sales to an extent, as many quit smoking in their 30s and 40s due to health concerns. Smoking prevalence is highest among those aged 25-34 years and over 55-year-olds. These older smokers tend to have longstanding habits and thus find it more difficult to quit. Over 55-years-old are also more likely to be heavier smokers, smoking over six cigarettes/day.
Cigarettes are widely available from supermarkets, forecourt retailers and tiendas (independent small grocers). These channels offer the most convenient locations and account for the strongest share of sales, with supermarkets dominating and holding a 68% retail volume share in 2016. Forecourt retailers accounted for a 17% share, while independent small grocers had an 11% share. Self-service counters and vending has been banned for tobacco since 2011, with these products stored behind the counter and only available on request.
Independent small grocers are losing share to modern grocery retailers, with the former dropping by one percentage point in terms of retail volume share in 2016 over the previous year. This is due to many consumers' crime concerns, with supermarkets and forecourt retailers viewed as offering a more secure shopping environment in comparison to independent small grocers. In addition, gangs often pressure independent small grocers to sell illicit cigarettes, with these posing strong competition to higher-priced legal products in the channel. Cigarette players also find it more cost-effective and secure to focus on modern grocery retailers, due to criminals often targeting independent small grocers.
Distribution patterns for cigars and cigarillos are very different to those of cigarettes, with these products having more limited availability. Cigars and cigarillos are high-end products that appeal mainly to connoisseurs, who prize quality and a wide range. Tobacco specialists thus dominate sales, accounting for 76% of retail volume sales in 2016, followed by department stores with a 17% share. Smoking tobacco is also a small niche, with sales dominated by pipe tobacco, and availability limited to outlets offering cigars and cigarillos. For smoking tobacco, tobacco specialists dominated with an 80% retail volume share in 2016, while department stores accounted for the remainder of sales, with a 20% share.
Illicit trade is strong and growing in El Salvador, accounting for 24% of overall cigarette volume consumption in 2016 and rising from a share of 19% at the start of the review period. Illicit trade furthermore saw a 6% volume CAGR during the review period, in contrast to the 4% overall retail volume decline seen for legal sales. Legal products are struggling to compete, due to lower-priced illicit cigarettes being widely available in the country.
Illicit trade is able to flourish due to the power of organised gangs in many areas. While some gangs operate larger illicit supply and sales networks, local gangs will often require payment in order to operate in specific areas and also often pressure independent small grocers to sell illicit products. Cigarettes are viewed by most gangs as a reliable and low-risk income source, with proceeds enabling them to buy weapons, vehicles and real estate.
Low prices and wide availability are the main factors supporting strong illicit sales, with a 20-stick pack of illicit cigarettes available for around USD1.00 via independent small grocers, street vendors and open markets. In contrast, legal cigarettes cost around USD3.00 for a 20-stick pack. In addition, many street vendors continue to offer single sticks of illicit cigarettes, despite the minimum legal pack size being set at 10 sticks. This makes these products' prices even more accessible and is believed to be a significant factor behind underage smoking. Demand for illicit products is supported by widespread poverty in the country, with many smokers thus seeking the lowest prices that are available. This is despite growing awareness that illicit cigarettes are often low in quality.
All illicit cigarettes are smuggled into El Salvador, with no domestic production. Most are legally produced in Asia, with key source countries including China, Korea, Vietnam and India. Key brands include Modern and Pine Blue. Paraguay is also a significant source country. Smuggled cigarettes tend to travel via Panama and Belize before crossing Guatemala by land and entering El Salvador's permeable borders. The availability of smuggled cigarettes is notably strongest in border areas of the country, where prices are also lowest.
Illicit trade growth slowed dramatically towards the end of the review period, with 2016 seeing just 1% volume growth. This was due to increasing government enforcement in partnership with the Crime Stoppers organisation. This organisation began operations in El Salvador in 2011 and operates the www.tupista.info site, receiving anonymous information from the public, with around 5,000 crime reports overall received by mid-2017. Crime Stoppers continues to work hard in combating illicit trade, with its Denuncie Hoy ("Denounce today") social media campaign remaining active at the start of the forecast period. Crime Stoppers also announced in 2017 that it would begin to work with Guatemalan authorities in order to develop stronger border controls.
Slower illicit trade growth in 2016 was also linked to growing awareness of the role of illicit cigarettes in funding and perpetuating gang violence, making some smokers less willing to buy these products. This was partly due to campaigns such as Denuncie Hoy, which directly linked illicit cigarettes to the purchase of guns and to murders and violence. There is also widening awareness that all legal packs carry 50% graphic health warnings, with more consumers becoming aware that packs without such warnings are invariably illicit.
There is some presence for smuggled cigars and cigarillos. However, illicit trade is less of a problem in these areas. Most gangs focus mainly on cigarettes, having established sales networks for these products in place via street vendors and market stalls. Cigars and cigarillos are mainly sold via tobacco specialists, department stores and hotels/restaurants/bars, with it being more difficult for organised crime to push for sales via these channels. Those illicit cigars and cigarillos that are sold in the country are mainly found in hotels/restaurants/bars.
The legal purchasing age is set at 18 years for all tobacco products. Since 2011, there has been a requirement for vendors to verify age in case of doubt. There were no changes to this legislation towards the end of the review period.
Many start to smoke at very young ages, with this particularly true of boys. According to a PAHO (Pan American Health Organization) survey from 2012, 30% of 13-15-years-old had smoked at least once, with half of this group having started smoking before aged 10 years.
There is no legal limit on tar levels in El Salvador, although tar, carbon monoxide and nicotine levels must be shown on packs. There is also a ban on misleading terms such as "low tar" that might suggest a particular product is less harmful.
In order to combat illicit production, packaging must also indicate the brand name, manufacturer, place of manufacture and name of importer in Spanish. Packs must also show a printed price, which must include ad valorem tax and specific tax, and state "Product authorized for sale in El Salvador."
Smokers tend to prefer a milder flavour and lower tar level, although this preference is most pronounced among those buying legal products. Most illicit cigarettes available in the country have high tar levels and those buying these products often do so due to their stronger flavour.
There is a full ban on advertising for tobacco products. This includes free samples, competitions and the use of promotional items. Sponsorship of events is also fully prohibited.
Since 2011, the Law Regulating Tobacco has required mandatory graphic and textual health warnings on all tobacco packaging. These must cover 50% of the two main faces of packs.
The 2011 Law Regulating Tobacco also introduced a public smoking ban. This is extensive and covers all public and private workplaces; health, government, educational and sports centres; public transport; playgrounds; areas under ecological protection; and cinemas, cultural centres and auditoriums. This public smoking ban is well enforced in many areas and resulted in many consumers cutting back on smoking or quitting altogether.
2011 legislation also introduced other restrictions for tobacco. These included a ban on single-stick sales, creating a minimum pack size of 10 sticks, and a ban on vending sales. Tobacco also may not be sold in places where there is a public smoking ban, while self-service displays in stores were banned.
Taxation and duty levies
In contrast to many countries around the world, there was no change in tax rates for tobacco products in El Salvador during the review period. Cigarettes, cigars and cigarillos all face a special tax of USD0.0225/stick. Ad valorem tax of 39% is also imposed on cigarettes, while cigars face 100% ad valorem tax. Imported products also face 30% import duty. With no significant tobacco production in El Salvador, this covers all products that are legally available. A sales tax of 13% was also imposed throughout the review period.
Strong sales of illicit cigarettes may have deterred the government from introducing higher taxes during the review period, with consumption increasingly shifting from legal to illicit sales. However, it appears likely that higher taxes will be introduced in the forecast period, due to strong pressure from the World Health Organisation (WHO). El Salvador was late in ratifying the WHO's Framework Convention on Tobacco Control but finally did so in 2014, with this coming into force in October of the year.
Files are delivered directly into your account within a few minutes of purchase.
Delivery: Files are delivered directly into your account within a few minutes of purchase.
Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in El Salvador with research from Euromonitor's team of in-country analysts.
Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.
If you're in the Tobacco industry in El Salvador, our research will save you time and money while empowering you to make informed, profitable decisions.
When you purchase this report, you also get the data and the content from these category reports in El Salvador for free:
Chart 1 Tobacco in El Salvador in 2016 Chart 2 El Salvador Socioeconomic Trends
Taxation and duty levies
Table 1 Taxation and Duty Levies 2011-2016
Table 2 Sales of Tobacco by Category: Volume 2011-2016 Table 3 Sales of Tobacco by Category: Value 2011-2016 Table 4 Sales of Tobacco by Category: % Volume Growth 2011-2016 Table 5 Sales of Tobacco by Category: % Value Growth 2011-2016 Table 6 Forecast Sales of Tobacco by Category: Volume 2016-2021 Table 7 Forecast Sales of Tobacco by Category: Volume 2016-2021 Table 8 Forecast Sales of Tobacco by Category: Value 2016-2021 Table 9 Forecast Sales of Tobacco by Category: % Volume Growth 2016-2021 Table 10 Forecast Sales of Tobacco by Category: % Value Growth 2016-2021
Chart 3 Cigarettes: Modern Retailer (1) Chart 4 Cigarettes: Modern Retailer(2) Chart 5 Cigarettes: Modern Retailer(3)
Table 11 Sales of Cigarettes: Volume 2011-2016 Table 12 Sales of Cigarettes by Category: Value 2011-2016 Table 13 Sales of Cigarettes: % Volume Growth 2011-2016 Table 14 Sales of Cigarettes by Category: % Value Growth 2011-2016 Table 15 Forecast Sales of Cigarettes: Volume 2016-2021 Table 16 Forecast Sales of Cigarettes by Category: Value 2016-2021 Table 17 Forecast Sales of Cigarettes: % Volume Growth 2016-2021 Table 18 Forecast Sales of Cigarettes by Category: % Value Growth 2016-2021 Table 19 NBO Company Shares of Cigarettes: % Volume 2012-2016: Table 20 LBN Brand Shares of Cigarettes: % Volume 2013-2016: Table 21 Sales of Cigarettes by Distribution Format: % Volume 2011-2016 Summary 1 Cigarettes Pricing
CIGARS, CIGARILLOS AND SMOKING TOBACCO
Table 22 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Volume 2011-2016 Table 23 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Value 2011-2016 Table 24 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Volume Growth 2011-2016 Table 25 Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Value Growth 2011-2016 Table 26 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Volume 2016-2021 Table 27 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: Value 2016-2021 Table 28 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Volume Growth 2016-2021 Table 29 Forecast Sales of Cigars, Cigarillos and Smoking Tobacco by Category: % Value Growth 2016-2021 Table 30 NBO Company Shares of Cigars and Cigarillos: % Volume 2012-2016: Table 31 LBN Brand Shares of Cigars and Cigarillos: % Volume 2013-2016: Table 32 NBO Company Shares of Smoking Tobacco: % Volume 2012-2016: Table 33 LBN Brand Shares of Smoking Tobacco: % Volume 2013-2016: Table 34 Distribution of Cigars and Cigarillos by Format: % Volume 2011-2016 Table 35 Distribution of Smoking Tobacco by Format: % Volume 2011-2016 Summary 2 Cigars, Cigarillos and Smoking Tobacco Pricing
SMOKELESS TOBACCO AND VAPOUR PRODUCTS
Why buy this report?
Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.