Premiumisation in a trading down market
While the Czech economy remained in recession in 2012, the strong desire of Czech smokers for premium products was present, leading to an above-average performance of premium products. Czech tobacco consumers traded down during 2009-2011, moving particularly from mid-priced cigarettes to economy cigarettes, while many consumers abandoned economy cigarettes and switched to RYO tobacco where the label “Premium RYO tobacco” quickly became very important.
Illicit trade sees a slight decrease in 2012
Cigarettes and smoking tobacco are smuggled into the country mainly through Ukraine and Poland. Domestic (but mostly run by foreigners) illegal workshops also have a negative impact on overall official retail volume sales. In addition, the Czech Republic is no longer solely a transit country for smuggling cigarettes from Eastern to Western Europe but also a target market. The decrease of illicit trade in 2012 was partially the result of closing several illegal domestic cigarette production plants as well as destroying an underground tunnel on the Slovak-Ukrainian border which used a small railway cargo train to smuggle cigarettes across the border.
Smoking tobacco and cigars gain further popularity
In the face of continued rising prices of cigarettes and thrifty consumer behaviour, smoking tobacco had a price advantage over cigarettes. An increasing number of smokers are turning towards make-your-own (MYO) or roll-your-own (RYO) smoking products. The higher consumption of cigars resulted in a wider range of products in the marketplace and lower prices.
Philip Morris dominates tobacco in the Czech Republic
Philip Morris CR continued to lead cigarettes in the Czech Republic in 2012 despite losing share throughout the review period. The company offers some of the leading cigarette brands in the Czech Republic for example Philip Morris, Chesterfield and Marlboro. The company’s top three brands had a combined volume share of 30% in 2012. Philip Morris is considered a price setter in the Czech market and therefore other players wait for it to adjust its prices before reacting accordingly.
Higher excise taxes expected in 2014
Increases in taxation took place in January 2012 while further excise tax increase is expected in 2014 due to the deadline for the implementation of European policy on minimum levels of consumption tax. The Czech koruna might depreciate against Euro (i.e. due to elections held in late 2013) making it worth purchasing cigarettes abroad. Whether exchange rate plays a role or not forestalling is expected to take place in 2014. If there is a new increase in tax on tobacco products there will be an attempt to turn high levels of illicit trade into purchases of legal products. The price increase was CZK2-4 per pack in 2012. A further increase of CZK5-6 is expected to take place by 2015.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Czech Republic with research from Euromonitor's team of in-country analysts.
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The Tobacco in Czech Republic 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 Czech Republic?
- What are the major brands in Czech Republic?
- Which sector of the tobacco products market is the largest by value sales in Czech Republic?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in Czech Republic?
- Which sector is the most heavily taxed in Czech Republic?
- Which companies dominate in the total tobacco market in Czech Republic in terms of market share?
- What is the distribution channel split for the tobacco products market in Czech Republic?
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This industry report originates from Passport, our Tobacco market research database.