Smoking prevalence continues to drop
In 2003, the Mexican government started to focus on reducing smoking prevalence by banning the advertising of tobacco products in the mass media (television, radio, cinemas, billboards and most of the press). One year later, it published Ley para la Protección de No Fumadores en el Distrito Federal (Law to Protect Non-Smokers in Mexico City). The law banned smoking in public places in Mexico City to protect non-smokers from second-hand smoke. Subsequently, several changes to tobacco legislation and tax increases have come into effect, supported by education programmes. As a result, smoking prevalence rates in Mexico have dropped, leading to a decline in retail volume sales across tobacco.
Government focuses on the illicit trade
As a result of the recent tax rise, which came into effect at the beginning of 2011, the illicit trade in cigarettes saw an important increase. This development concerned manufacturers and the government. Illicit brands generally arrive from India, China, Vietnam and Paraguay. Illicit cigarettes are 3-4-times cheaper than legal brands, which encourages low-income consumers to switch to the illicit trade. In 2012, the government carried out several confiscations of illicit cigarettes. The biggest action concerned the confiscation of around 83 million cigarettes by the customs officers of Mazatlán, Sinaloa. It is expected that the government will continue fighting the illicit trade and introduce technology-based controls to reduce the prevalence of illicit tobacco by making it easier to identify illegal production and counterfeit products.
Philip Morris International Inc leads tobacco in Mexico
Philip Morris International Inc, through its Mexican distributor Cigarros La Tabacalera Mexicana SA de CV (CIGATAM), dominates cigarettes. Ranked second 15 years ago, the company has continued to consolidate leadership of cigarettes through the review period. Its strategy is based on the consolidation of premium, mid-priced and economy brands, through its leading brands, Marlboro, Benson & Hedges and Delicados. Marlboro alone accounted for more than one half of retail volume sales of cigarettes in 2012. Philip Morris has a significant corporate social responsibility programme in Mexico, and it engages in a number of philanthropic activities throughout the country. During the forecast period, Philip Morris (CIGATAM) is expected to remain the leading player.
Smokeless tobacco is unavailable in 2012
Dominated in 2011 by the Kayak brand (US-style moist snuff), smokeless tobacco was absent from the market in 2012, due to import licence issues. Smokeless tobacco is a very small category and it is not very familiar to Mexican consumers. So, even if Kayak returns to the market in 2013, once its licence to import is approved, its sales are expected to remain low through the forecast period and the category could disappear in the medium to long term.
Retail volume sales are expected to continue to decline in the forecast period
While no new tax increases were announced in the beginning of 2013, it is highly probable that once the government finds better ways to control the illicit trade it will approve higher taxes. The World Health Organization (WHO) has recommended that a fixed 75% of the retail selling price of cigarettes should be the benchmark for tobacco taxation for every country. In Mexico, the average is 57% (after VAT, value-added tax).
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Mexico with research from Euromonitor's team of in-country analysts.
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If you're in the Tobacco industry in Mexico, our research will save you time and money while empowering you to make informed, profitable decisions.
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The Tobacco in Mexico market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Production, imports by origin, exports by destination
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Tobacco in Mexico?
- What are the major brands in Mexico?
- Which sector of the tobacco products market is the largest by value sales in Mexico?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in Mexico?
- Which sector is the most heavily taxed in Mexico?
- Which companies dominate in the total tobacco market in Mexico in terms of market share?
- What is the distribution channel split for the tobacco products market in Mexico?
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This industry report originates from Passport, our Tobacco market research database.