As the pandemic continued to impact Chile throughout 2021 due to the appearance of new variants, the government reinforced health measures that meant the country experienced intermittent quarantines for most of the year, despite having one of the most successful vaccination campaigns in the world and finalising a reopening phase during Q4. The government provided multiple social aid and pension fund withdrawals, which put cash directly into the pockets of consumers to assist them through the challenging period, but for many others, it presented disposable income that they could use to indulge in particular products at a time when many other recreational activities, such as travel, nightclubs and restaurants were not available.
Measures that Chile maintained during 2021 included the closure of its land borders for most of the year, where illegal contraband tends to originate from neighbouring countries. Chile has long borders with Peru, Bolivia and Argentina, and therefore illicit cigarettes, mainly produced in Paraguay and South Korea, have become a significant issue for Chile, representing 23% share of total cigarette volume sales pre-pandemic.
British American Tobacco Chile SA retained its dominance of cigarettes in Chile in 2021, benefiting from its expansive distribution network. The player’s Pall Mall line was amongst the leaders with all its brands performing well.
While Chile continues to move forward from the ongoing pandemic, greater health consciousness amongst the population will see a gradual declining demand for retail cigarettes from 2022 onwards. However, smoking prevalence amongst the general population will remain more or less flat over the forecast period.
Philip Morris was among the few economy brands of cigarettes that remained available in Chile over the review period, but now this has been rebranded as Marlboro Crafted to leverage its new name, while British American Tobacco has been phasing out its economy Hilton brand. Under this scenario, where no notable economy brands remain in the field, this could lead to perceptions amongst low-income consumers that the existing market is too expensive for them, encouraging them to turn towards alternative brands, or illicit trade.
The greatest impact of COVID-19 will be evident in the longer term, as Chileans continue to re-evaluate their cigarette consumption both in terms of expenditure as well as new social and health contexts. While an increasing number of smokers are likely to move towards alternative tobacco products such as e-vapour products or even heated tobacco, which is predicted to enter the market over the forecast period, taxation and new legislation regarding reduced harm products may well be extended.
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RETAIL SALES OF DUTY PAID CIGARETTES The definition of cigarettes for the purposes of this study is duty-paid, machine manufactured white-stick products. This does not exclude brands of cigarettes that do not use white paper but it is designed to exclude the volume of non-machine manufactured products such as bidis/beedis (India) and papirosy (Russia), and other smoking products made with tobacco but that either do not resemble cigarettes as recognised in the US or Europe, or those that are not machine manufactured. The exclusion of these products is intended to give a more accurate picture of the "true" market for cigarettes and cigars which has been distorted in official statistics and published reports because of the inclusion of hybrid products. NB Please note that due to its central importance and integration into the industry mainstream, Indonesia’s market data does include hand-rolled kreteks DUTY-FREE sales are excluded from retail sales, as are herbal cigarettes. ILLICIT TRADE CIGARETTES Not included in retail sales, but split out separately in volume terms only. Defined as non-duty paid cigarettes (includes smuggled & counterfeit/fake products combined). Legitimate cross-border sales are considered duty-paid. Sales arising from a foreign national purchasing cheaper cigarettes in bulk in a neighbouring country for personal use and exported back are attributed to the country where the purchase is made (e.g. bulk cigarette sales by British nationals in France are attributed to France).See All of Our Definitions
This report originates from Passport, our Cigarettes research and analysis database.
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