Cigarettes and Alternative Nicotine Products in Latin America

February 2024

Tobacco in Latin America was recording positive value growth in 2022, driven by the still dominant cigarettes category, but with e-vapour and heated tobacco products recording more dynamic growth. However, the development of these next-generation products, while benefiting from the strong growth expected in the markets where they are on legal sale, will continue to be stymied at a regional level by their bans in Argentina, Brazil and Mexico, Latin America’s three biggest tobacco markets.

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Key findings

Illicit trade continues to impact legal sales

The difficult economic climate, with the pandemic having impacted some consumers’ disposable incomes and the recent high inflation interest rates, have seen smokers increasingly turning to illicit trade for their cigarettes, with a resultant negative impact on legal sales. In some cases, this has seen players concentrating on their premium brands, as the usual buyers of economy products are those most likely to switch to buying illicit cigarettes.

E-vaping and heated tobacco bans in the three biggest markets

The authorities in Argentina, Brazil and Mexico have banned the distribution and sale of next-generation tobacco products like e-vaping or heated tobacco. While there are unauthorised sales of these products, often via e-commerce, but also through bricks-and-mortar outlets in some cases, the governments in these countries were showing no likelihood of lifting their official bans in the immediate future.

Dynamic growth for next-generation products elsewhere in the region

Next-generation tobacco products, mainly e-vapour products, but also, increasingly, heated tobacco, have been seeing strong growth in a number of Latin American countries. The latter has mainly been making headway in Colombia and Central America, predominantly through Iqos/HEETS, although PMI is also now looking to target lower-income consumers in Colombia (Bonds by Iqos) and Guatemala (lil SOLID) with cheaper variants.

Stricter tobacco legislation for Mexico

From January 2023, new legislation came into effect in Mexico, expanding areas where smoking is prohibited to any workplace, spaces of collective gatherings, all public transportation and all educational establishments. It also prohibited all forms of tobacco advertising, promotion and sponsorship through any means of communication and dissemination, including the direct and indirect display of tobacco products at points of sale.

 

Scope
Key findings
High illicit sales levels continue to impact legal sales of cigarettes
Latin America has the lowest per capita consumption rate among the seven regions
Return to falling sales expected from 2023
Continued growth expected for smokeless tobacco, e-vapour products and heated tobacco
Sales in Brazil continue rising despite the falling smoking prevalence rate
Colombia drives regional growth in e-vapour products
Legal sales hit by major increase in illicit trade in Peru
Heated tobacco products seeing strong growth in Guatemala
Latin America region records declining sales despite the growth seen in Brazil
E-vapour products the most highly-developed category
Flavour capsules a popular trend in Argentina
Smokeless tobacco, e-vapour products and heated tobacco banned in a number of markets
Additional 20% tax does little to dampen demand for e-vaping in Costa Rica
E-commerce share grows but still remains small
Small local grocers the main distribution channel for cigarettes in Latin America
Retail e-commerce is the dominant channel for e-vaping product sales in Chile
Other non-grocery retailers the main channel in Colombia
Extremely concentrated competitive landscape for cigarettes
Argentina’s Tabacalera Sarandi gaining share thanks to the demand for cheaper local brands
PMI and BAT launch new flavour capsule products in Argentina
Marlboro and Pall Mall continue to lead the brand rankings
British American Tobacco the clear leader in e-vaping products with its Vuse brand
Vuse Go set to launch in Chile
Dominant player PMI introduces its lil SOLID/Flit heated tobacco products in Guatemala…
…with possible launches elsewhere in Latin America expected in 2023
Unit volume sales of cigarettes expected to decline over the forecast period
Illicit trade expected to account for 50%-plus of sales in Brazil, Ecuador and Peru in 2027
Mexico bans advertising and expands no-smoking areas in public
Further strong growth expected for e-vaping and heated tobacco
Open vaping dominates in Chile, closed vaping in Colombia
Legislation and/or taxation could impact the future performance
Argentina: Market Context
Argentina: Competitive and Retail Landscape
Bolivia: Market Context
Bolivia: Competitive and Retail Landscape
Brazil: Market Context
Brazil: Competitive and Retail Landscape
Chile: Market Context
Chile: Competitive and Retail Landscape
Colombia: Market Context
Colombia: Competitive and Retail Landscape
Costa Rica: Market Context
Costa Rica: Competitive and Retail Landscape
Dominican Republic: Market Context
Dominican Republic: Competitive and Retail Landscape
Ecuador: Market Context
Ecuador: Competitive and Retail Landscape
Guatemala: Market Context
Guatemala: Competitive and Retail Landscape
Mexico: Market Context
Mexico: Competitive and Retail Landscape
Peru: Market Context
Peru: Competitive and Retail Landscape
Uruguay: Market Context
Uruguay: Competitive and Retail Landscape

Tobacco

Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.

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