Cigarettes in Brazil

PROSPECTS

Cigarette retail volume sales continue to fall

Retail volume sales of cigarettes continued to fall in 2017 as a result of several different factors. Consumer adoption of healthier lifestyles continued to reduce the number of smokers, or at least their cigarette purchases.

Illicit sales continue to increase

While historically most illicit cigarettes in Brazil came from Paraguay, this has now changed. In 2017, many local production sites for illicit and counterfeit cigarettes were found in the country, with more still to be dismantled.

Uncertainty surrounding flavoured cigarettes

Over the review period most brand manufacturers invested in flavoured cigarettes as a strategy to attract consumer attention and increase sales. The uncertainty surrounding flavoured cigarettes in Brazil started in 2013, when ANVISA prohibited their sale, with this upheld by the Supreme Court.

COMPETITIVE LANDSCAPE

Souza Cruz closes its production plant in the south of the country

Souza Cruz, the local subsidiary of British American Tobacco, continued to dominate cigarettes in Brazil in 2017. However, during the year the company closed its production plant in the state of Rio Grande do Sul, which was responsible for producing around 20% of its cigarettes in the country.

Philip Morris invests in its operations in the southern part of the country

While Souza Cruz closed its plant in the state of Rio Grande do Sul, the second biggest manufacturer in the country, Philip Morris, is investing in the region. The company’s only production plant in Brazil is located in the state of Rio Grande do Sul, while its operations and administrative centre are located in the state of Paraná.

Labelling regulations continue to limit space for branding

Although the government has not yet discussed the introduction of plain packaging, labelling regulations already limit the space available on cigarette packs for branding. In 2018, health warning images became more shocking, while also taking up the whole of the back of cigarette packs.

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