Cigarettes in Georgia

PROSPECTS

Price hikes lead to increase in illicit trade

Although illicit trade levels remained low and stable over the early part of the review period, steep price hikes in 2017 and 2018 due to tax and price increases led to the share of illicit sales rising again in both years, as smuggling from neighbouring countries increased. Russia and Armenia levy lower taxes on cigarettes, meaning retail prices are lower in these countries.

Lower taxes benefit non-filter cigarettes

Different levels of excise duty are levied on filter and non-filter cigarettes in Georgia. In 2018 the duty payable on a pack of 20 non-filter cigarettes amounted to GEL0.

Health trends lead to a decline in smoking prevalence

The health and wellness trend continued to lead to retail volume declines in cigarettes in 2018. An increasing number of Georgians are seeking to remain or become healthy and increase their fitness levels, with gym membership and the number of runners competing in marathons both on the rise.

COMPETITIVE LANDSCAPE

Lower excise tax on non-filter cigarettes benefits local player

The recent excise tax rises on cigarettes led to a switch away from premium cigarettes to mid price and economy formats in 2018, especially among lower-income consumers. Domestic producer, Tbilisi Tobacco JSC, benefited from this with its popular Pirveli brand in the economy segment.

Expensive leading brands lose share while Philip Morris powers on

Some of the leading brands, including Winston and Sobranie by Japan Tobacco and Kent by British American Tobacco Georgia lost share in 2018 as increased prices encouraged smokers to switch to less expensive, economy brands. Economy brands such as Astra by Omega Group Tobacco continued to gain share gradually.

New launches focus on the economy segment

New brand launches were restricted to the economy segment in 2017 and 2018. NRG, launched by Omega Tobacco Group, follows the concept of Pirveli by Tbilisi Tobacco JSC in that it is non-filter but provides a separate box of filters which can be added by the consumer.

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