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Smoking is increasingly socially unacceptable, with strong concerns about passive smoking. Smoking prevalence is highest among low-income men, especially in Northern Ghana, while these smokers are often attracted by illicit trade. A sharp retail volume decline is likely as graphic health warnings become mandatory and single-stick sales are banned, while illicit trade will grow. Pipe tobacco could grow due to a fashion for shisha smoking, but sales may be hit by anti-smoking campaigns.
This report analyses the market for tobacco in Ghana. 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.
Smoking is not popular in Ghana, with few Ghanaians smoking and most regarding smoking as unhealthy and antisocial. Smoking by women has always been frowned upon but even male smokers are facing heavy and increasing pressure to quit. Intensifying anti-smoking campaigns are further adding to the unhealthy image of tobacco. Smoking is increasingly viewed as somewhat shameful, with many of those that smoke doing so discreetly in order to avoid criticism from family and friends. Many view smoking as a bad habit associated with teenage rebellion and expect younger smokers to give up as they grow older and begin working.
With smoking having an increasingly negative image, smoking prevalence declined during the review period. 2014 World Health Organization data derived from the country's Demographic and Health Survey indicated that just 6% of men aged 15-49-years smoked, while less than 1% of women smoked at this time. Underage smoking is believed to be more common for both men and women however, with an estimated 7% of girls and 9% of boys aged 13-15-years smoking. This reflects societal pressure on adults to avoid smoking, particularly among women.
Smoking prevalence also varies widely by region. Within the largely rural Upper East, Upper West and Northern regions, smoking prevalence is considerably higher. These regions are characterised by low income and education levels, with awareness of the dangers of smoking often lower. In contrast, the capital Accra is home to most of the country's mid- to high-income consumers, with these groups tending to view smoking as unhealthy and to be concerned about passive smoking. Smoking prevalence is particularly low in the capital as a result.
The government is increasing its efforts to discourage smoking, with the Ministry of Health increasingly vocal in urging smokers to quit. The ministry also places a strong emphasis on deterring young Ghanaians from starting smoking via in-school programmes. The government launched World No Tobacco Day in Ghana in June 2016, with this event further highlighting the dangers of smoking. VALD (Vision for Alternative Development) is an NGO that also operates anti-smoking campaigns, with April 2016 seeing the organisation host an exhibition of graphic health warnings in the hope of deterring smoking.
There is very little new product development in tobacco in Ghana, partly due to high annual registration fees for cigarettes, with these set at USD15,000 per brand variant. This lack of innovation also reflects low levels of competition, with British American Tobacco being one of only two legal importers into the country during the review period and facing little challenge to its dominance. This company mainly focuses on ensuring a wide distribution reach for established brands such as Rothmans King Size and Pall Mall. The company offered one innovation towards the end of the review period however, with Rothmans Demi offering lower tar levels. This launch aims to appeal to urban smokers concerned about social censure by offering reduced odour and thus a theoretically more discreet smoke.
Beyond cigarettes, the review period saw many new products enter the country within shisha pipe tobacco and vapour products. However, most shisha tobacco products and all vapour products offered in the country are not legally registered. They are thus classified as illicit products, being excluded from the scope of this report.
Tobacco is expected to see an ongoing value decline at constant 2016 prices in the forecast period. Smoking is already viewed in a negative light by the majority of consumers, with concerns over the health impact of passive smoking likely to intensify further in the forecast period. Consequently, many smokers will face growing pressure to quit from family and friends. In addition, anti-smoking legislation will tighten in the forecast period, with graphic health warnings becoming mandatory in 2018 and single-stick sales banned in 2017. The public smoking ban will also intensify and is likely to be more strictly enforced. Consequently, smoking is expected to become less affordable and more socially problematic for smokers. Overall sales are expected to see a 28% value decline at constant 2016 prices, with this slower in comparison to the 46% decline seen during the review period due to a lower sales base.
Value sales decline will mainly be due to a poor performance for cigarettes, which are expected to see a 36% value decline at constant 2016 prices. These products will be the main focus of anti-smoking campaigns and will also be hit hard by a ban on single-stick sales. In addition, cigarettes will face strengthening competition from illicit trade as low-income smokers seek more affordable options, particularly as illicit single-stick sales are likely to remain available. The north of the country will continue to see higher smoking prevalence, and it also has highly-porous borders, with illicit cigarettes thus likely to remain widely available in this region. While retail volume sales of cigarettes are expected to see a 33% decline in the forecast period, illicit trade volume is thus set to see further 6% growth.
Smoking tobacco is expected to be the sole product area to see significant value growth in the forecast period. Sales are expected to benefit from a fashion for shisha pipe smoking, in addition to more shisha tobacco brands becoming legally registered in the country. More of these brands will thus move from illicit to legal sales. However, a concerted government campaign highlighting the health risks of shisha smoking is possible and this will likely result in a considerably worse performance than the 12% value CAGR currently forecast.
Low-income men are the main consumers for cigarettes, particularly those living in rural areas. Smoking prevalence is notably stronger in the more rural north of the country. Despite tax increases during the review period, cigarettes remain affordable, even for low-income workers, particularly as single sticks continue to be offered by many vendors. There are also very low-priced brands available, such as British American Tobacco's Tusker, while lower-mid-priced brands such as Pall Mall are also affordable. However, many of the poorest smokers opt for illicit cigarettes due to these products' even lower prices and wide availability. Mid- to high-income adults are less likely to smoke, although those that do tend to avoid illicit cigarettes due to safety concerns. These smokers are most likely to opt for brands with a higher-quality image such as Rothmans.
Tobacco use is not generally viewed as aspirational. Most regard smoking as unhealthy, antisocial and somewhat disreputable. It is rare to see people smoking in the street, with most smoking discreetly. However, shisha pipe smoking has a fashionable image among mid- to high-income young adults in major cities. This is linked to shisha smoking mainly being available in upmarket and modern bars and restaurants, while there is also a widespread belief that smoking shisha is less unhealthy than smoking cigarettes. Cigars and cigarillos are also regarded as luxury products and associated with affluence. However, most consumers view all tobacco products in a negative light, while the majority also remain unaware of shisha smoking. There is little consumer awareness of vapour products, with limited availability and high prices for these products. Vapour products are sold in very small quantities and are mainly popular among expatriates who have become aware of these products in their own countries.
Ghana has a very young population, with a median age of just 21 years in 2016. The population is also seeing good growth, with an increase of 13% over the review period as a whole. However, increasingly negative attitudes towards smoking are likely to result in a further decline for the consumer base for tobacco in the forecast period. Many families take a protective and controlling approach towards their children, with there likely to be growing pressure on young men and women to avoid smoking in the forecast period. Social censure of smoking is expected to intensify following the introduction of graphic health warnings on packaging in the forecast period, with these likely to result in growing concern over the health impact of smoking and passive smoking.
Tobacco products are easily accessible in Ghana and sold via a wide range of channels. Most smokers simply buy these products as required from the most convenient outlet, with no preferences regarding channel. Shares are thus spread across a number of channels, partly shaped by consumers' demand for convenience and partly by the distribution strategies of dominant player British American Tobacco. A tobacco sales permit is legally required in order to sell these products, with these held by larger hotels/restaurants/bars and modern grocery retailers. However, many smaller hotels/restaurants/bars and traditional grocery retailers sell tobacco without a permit, with this regulation only laxly enforced.
While traditional grocery retailers dominate, this is chiefly due to their wide presence. Independent small grocers account for a 20% retail volume share, followed by street vendors with a 17% share and newsagent-tobacconists/kiosks with a 12% share. Modern grocery retailers' 18% retail volume share in cigarettes is lower in comparison to that seen for traditional grocery retailers. This is partly due to less convenient locations but is also due to outlets only selling cigarettes in unopened packs, rather than offering single sticks. There is no ban on sales via the on-trade, while many tend to smoke while out drinking, with hotels/restaurants/bars thus accounting for a 20% retail volume share in 2016.
Shifts in distribution for cigarettes towards the end of the review period primarily reflected retailing and on-trade evolution in the country, due to most smokers opting for the most convenient sales point. Expansion in the number of modern grocery retailers supported a marginal volume share gain for this channel in 2016 over the previous year, with supermarkets seeing the strongest gain. This trend was also linked to British American Tobacco increasing its focus on distribution via modern grocery retailers as more of these outlets opened. Hotels/restaurants/bars also benefited from investment towards the end of the review period, with the opening of more bars and nightclubs in major cities resulting in this channel slightly gaining share during the year. Traditional grocery retailers lost share as a result of these trends, while remaining dominant with a 52% retail volume share.
Pipe tobacco has more concentrated distribution in comparison to cigarettes, with these products not available from hotels/restaurants/bars or most modern grocery retailers, although distribution is widening via supermarkets. Traditional grocery retailers dominate, accounting for a 99% retail volume share in 2016. Newsagent-tobacconists/kiosks dominate with a 70% share, while street vendors account for the bulk of remaining sales at a 19% share. Independent small grocers are also significant and accounted for a 10% retail volume share in the year.
Illicit trade volumes are significant in Ghana, accounting for 24% of total volume sales in 2016. Furthermore, illicit trade gained share annually throughout the review period, rising from just an 18% share in 2011. Strong sales are linked to Ghana's porous borders and high excise duty in comparison to many regional countries, particularly given the tax increases seen during the review period. The majority of smokers are from low-income groups and are attracted by the low price of illicit products, with many unaware of or uninterested in these products' legal status. There is little awareness that illicit cigarettes may be low in quality or contain contaminants such as sawdust.
Major source countries for illicit cigarettes include Burkina Faso and Nigeria, with Nigerian products smuggled in via Togo. Northern Ghana sees particularly strong illicit trade, with most smuggling from Burkina Faso ending in this region. Most products smuggled in from Togo stem from British American Tobacco's Nigerian operations, with lower taxes in Nigeria enabling these to be sold at a lower price in Ghana. This includes brands that are also legally available in Ghana, such as Rothmans and Pall Mall, further contributing to unwitting purchases by consumers. Other brands smuggled into the country include Marlboro and regional economy brands.
For tobacco to be legally sold in Ghana, it must carry a "For sale in Ghana only" label, with packaging also indicating the minimum legal smoking age and featuring a barcode supplied by the Standards Authority. However, there remains little widespread awareness of this labelling requirement, particularly in rural areas. The government launched a clampdown on sales of products without such labelling in December 2015, seizing improperly labelled cigarettes from six vendors. These included the Bond Street, Rothmans and Gold Seal brands.
Illicit products present across a number of areas of tobacco, with only registered brands legal for sale. According to the country's Food and Drug Authority, cigars and cigarillos, all vapour products and many shisha pipe tobacco brands that are available are not registered and are thus illicit. Sales of these products are not actively prevented by the authorities, however, partly due to their distribution reach and sales volumes remaining fairly limited. Cigars and cigarillos are available via a small number of supermarkets and hotels/restaurants/bars in major cities. Illicit shisha pipe tobacco is mainly available in bars and restaurants in major cities and tourist areas and smoked on the premises. Vapour products are only available in major cities and are mainly sold via social media websites such as Facebook.
Informal tobacco production is also significant in some rural areas. Some rural households grow their own tobacco leaves, to smoke themselves or sell locally.
The minimum legal smoking age is set at 18 years in Ghana, with this age limit remaining unchanged at the end of the review period. Those below aged 18 years are also banned from buying or selling tobacco, with those selling to minors facing up to three years imprisonment.
Underage smoking is an increasing concern in Ghana, with westernisation encouraging some urban youngsters to smoke. Indeed, women are more likely to smoke between 13-15-years-old than they are between 15-49-years-old, with most adult women smokers facing heavy pressure to quit from their families. Rates of youth smoking are however still low in comparison to many countries, due to most young Ghanaians being closely monitored by their parents. Only an estimated 7% of girls aged 13-15-years smoke, alongside around 9% of boys in this age group.
There is growing concern over shisha pipe smoking among underage Ghanaians. In September 2015 newspapers notably stated that children as young as aged nine years had been found offering shisha pipe smoking to tourists at a resort in Accra, with some also demonstrating how to smoke these pipes.
There is no legal limit on tar levels in Ghana, while most smokers have a preference for a richer flavour and higher tar level. Most products thus have high tar levels, although British American Tobacco launched Rothmans Demi towards the end of the review period. This has a lower tar level and offers a lighter flavour and less odorous smoke. This brand is not however promoted as being low tar, with the use of terms such as "low tar", "light", "ultra light" and "mild" being prohibited by law.
The government sought to tighten legal restrictions on tobacco during the review period. The Tobacco Control Regulations were initially planned for introduction by the end of 2014 but finally passed into law in 2016. These came into force on 4 January 2017 and included a further 18-month compliance period for key measures, including those related to marketing, graphic health warnings and the public smoking ban.
There are longstanding restrictions on advertising for tobacco, with Ghana an early mover in introducing this legislation in 1982. This legislation banned TV, radio, print and outdoor advertising, alongside point-of-sale adverts, promotional discounts, non-tobacco items carrying tobacco brand names and paid placement in media. In-store displays and sponsorship are permitted, although players are not permitted to publicise any sponsorship. The 2016 Tobacco Control Regulations also saw a ban on the use of identifiable tobacco brands in films or TV, while programmes and films featuring smoking must be preceded by designated anti-tobacco adverts.
Textual health warnings were mandatory throughout the review period, with these required to cover 50% of the front and back of packs. Three sets of textual warnings are specified, with each including a message for the front and back of packs.
The 2016 Tobacco Control Regulations will result in graphic health warnings becoming mandatory from mid-2018. The combined area of graphic and textual warnings will cover 50% of the front of packs and 60% of the back of packs, positioned in the lower portion of each. Warnings must also be printed directly onto packs, rather than onto removable wrappings, and must be fully visible and in the English language. For smokeless tobacco, health warnings must cover a larger 65% of the front and back of packs. In addition, packs must state "For sale in Ghana only" on one side, while also stating the country of origin and highlighting 18-years-old as the minimum legal purchasing age.
A public smoking ban was introduced in 2013. This ban was fairly comprehensive in its coverage, including all workplaces and particularly naming educational facilities, health facilities, government offices, public transport, restaurants, shopping malls and bars/pubs. These premises are also required to display clear No Smoking signs in non-smoking areas. However, most premises are permitted to offer designated smoking areas.
In practice, the public smoking ban remained largely unenforced in the latter half of the review period. However, from August 2016, the Food and Drugs Authority increasingly used spot checks to enforce this legislation. Those found violating this ban faced heavy fines and the potential revoking of licence permits.
The 2016 Tobacco Control Regulations created stricter requirements for smoking areas, with these becoming effective from mid-2018. These aim to prevent smoke moving into non-smoking areas while smoking areas must also not be used for any activity involving non-smokers. The owner and managers of premises will also be required to ensure that nobody below 18-years-old enters smoking areas, while No Smoking signs must be displayed in non-smoking areas. This legislation also banned smoking in private vehicles where a child or pregnant woman is also on board and enshrined the right for premises owners or managers to operate entirely smoke-free.
The Tobacco Control Regulations also sought to make tobacco less accessible to low-income groups and underage smokers by banning single-stick sales. Only unopened packs will be legal for sale in the forecast period, with a minimum pack size of 10 sticks for cigarettes and 30g for smokeless tobacco.
Taxation and duty levies
Excise duty in Ghana is high and increased further at the end of the review period, rising from 150% of ex-factory price to 170% in July 2015. Tobacco also faces VAT at 15% and NHIL (National Health Insurance Levy) at 2.5%. VAT increased from 12.5% in December 2013.
In addition to tax, the government requires producers to pay annual registration fees on each brand variant, with Pall Mall Red and Pall Mall Menthol thus having to pay separate fees. These are particularly high for cigarettes and were set at USD15,000 at the end of the review period. These fees resulted in a declining range of cigarettes being available during the review period, particularly within economy cigarettes.
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Chart 1 Tobacco in Ghana in 2016 Chart 2 Ghana Socioeconomic Trends
Taxation and duty levies
Chart 3 Cigarettes: Government Warning Chart 4 Cigarettes: Wholesaler Chart 5 Cigarettes: Traditional Retailer: Street Vendor
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 6 Cigarettes: Modern Retailer Chart 7 Cigarettes: Traditional Retailer: Street Vendor Chart 8 Cigarettes: Modern Retailer
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
Chart 9 Cigars: Modern Retailer Chart 10 Cigars: Modern Retailer Chart 11 Cigars: Modern Retailer
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 Distribution of Smoking Tobacco by Format: % Volume 2011-2016 Summary 2 Cigars, Cigarillos and Smoking Tobacco Pricing
SMOKELESS TOBACCO AND VAPOUR PRODUCTS
Summary 3 Smokeless Tobacco and Vapour Products Pricing
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