Cigarettes in Georgia

PROSPECTS

Annually increasing excise tax expected to shrink cigarettes’ volume consumption further

Excise tax on cigarettes increased by 64% in 2017, which resulted in a significant drop in volume consumption. Excise tax increased again in 2018 and negative retail volume growth is set to continue over the forecast period.

Vapour products another obstacle to cigarettes’ performance

Vapour products appeared to be an obstacle to the expansion of cigarettes in Georgia. The relatively newly launched vapour products continued to register double-digit retail current value growth in 2017 and attracted some consumers of cigarettes.

Smoking ban to push down sales of cigarettes

The ban on smoking in public came into effect on 1 May 2018. The effect of the ban is not expected to be immediate but cigarette consumption is expected to reduce over the forecast period.

COMPETITIVE LANDSCAPE

Japan Tobacco Inc remains the leader of cigarettes in 2017

Japan Tobacco Inc retained its leading position in cigarettes in Georgia in 2017, as its portfolio covered mid-priced and premium segments. However, the dramatic increase in excise tax caused consumers switch to cheaper products, which affected mid-priced brands such as Winston and Camel.

Lower excise tax on non-filtered cigarettes benefits local players

The increased excise tax from 1 January 2017 did have an effect on cigarettes in Georgia, particularly on mid-priced cigarettes as some lower-income consumers had to switch to economy cigarettes. Local producer Georgian Tobacco Mfg Ltd benefitted from that trend thanks to its popular Pirveli brand in the economy segment.

Phillip Morris International Inc’s retail volume share increases further

Phillip Morris International Inc continued to recover from the supply issues of 2016 and 2017. Due to a legal dispute between Phillip Morris International Inc and local, Georgian distributor Omega 2, LLC, all the brands of Phillip Morris International Inc first got expensive very quickly and afterwards disappeared at all.

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