With only low growth in the unit price of cigarettes in 2018 due to increasing general tax across the price bands, the category continued to record stable retail volume growth. This was mainly supported by stable smoking prevalence in the country and a strong consumer base in lower-income groups who are accustomed to smoking regularly.
The high number of low-income smokers resulted in the dominant economy band of cigarettes continuing to gain retail volume share from the premium band, while there was also volume growth for mid-price cigarettes. Despite a marginally declining trend for premium cigarettes in 2018, more affluent smokers were indifferent to price increases and were unwilling to trade down to lower quality products, with some premium brands such as Marlboro recording positive retail volume growth.
Within the different price bands, players offering premium brands attempt to attract consumers through innovation when developing new products, as high-income consumers appreciate new flavour options. In line with this trend was a notable increase in retail volume sales recorded by the niche of flavour capsules in 2018 as witnessed by the success of Marlboro Purple Mix, whereby consumers have the option of pressing a button, which releases a fruit flavour.
Eastern Co SAE retained its dominance of cigarettes in 2018, gaining further retail volume share due to its expansive brand portfolio, including its leading cigarette Cleopatra Golden King, which is also the most popular economy priced cigarette amongst low-income consumers. Since Eastern Co SAE is state-owned, it is the only supplier with a licence to manufacture cigarettes in the country.
Philip Morris International announced a number of changes in 2018, with the first being an increase in prices for some of its brands, due to increasing production and labour costs. This impacted brands Merit, Marlboro Gold and Marlboro Red, leading to declining sales for Merit.
In a plan to increase production to meet growing demand for cigarettes, the board of Eastern Co agreed to raise the company’s paid capital to EGP2.25 billion from EGP1.
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This industry report originates from Passport, our Tobacco market research database.