The COVID-19 pandemic continued to have a decisive effect on smokers' consumption habits in 2021. Smokers were more price-conscious as their disposable incomes remained below pre-crisis levels.
Flavour capsule cigarettes gained further share and recorded another year of double-digit retail volume growth in 2021. Established cigarette brands such as Pall Mall, Marlboro, and Mevius consistently launch new flavour capsule options to sustain consumer interest and, more importantly, attract a wider audience.
Leveraging the growing popularity of flavour capsule cigarettes, British American Tobacco and Japan Tobacco (Hong Kong) Ltd are proactively tapping into this segment to retain their leading positions. To further boost their share, both players have adopted similar marketing strategies.
In the short term, the pandemic will continue to affect consumer behaviour. For instance, domestic retail will remain the pivotal channel for smokers, given that travelling abroad and buying cigarettes overseas is impractical.
Over the forecast period, flavour capsule cigarettes will continue to gain traction from younger consumers of legal smoking age due to the novel and complex taste provided. In addition, sales will benefit from the blanket ban on alternative smoking products coming into effect from April 2022.
The competitive landscape of cigarettes, in general, is likely to remain unchanged over the forecast period. Although Chinese brands such as Chunghwa and Double Happiness might regain share when borders reopen in 2023, the category will continue to be dominated by Philip Morris Asia Ltd, British American Tobacco, and Japan Tobacco (Hong Kong) Ltd.
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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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