Retail volume sales of cigarettes had been falling for most of the review period, but their rate of decline accelerated sharply during 2020. Lockdown measures associated with COVID-19 had a significant negative effect on the level of economic activity.
During the latter part of the review period, Gudang Garam Tbk PT overtook long-time leader HM Sampoerna Tbk PT in retail volume terms. This was partly because Gudang Garam Tbk PT applied only relatively modest price increases to its cigarette brands, making them more affordable to consumers.
KT&G Corp saw a significant increase in its share of retail volume sales during the review period prior to the pandemic – albeit from a relatively small base. This was thanks to innovative new product launches under its Esse brand, which target young adults of legal smoking age from the middle- and high-income groups.
Retail volume sales of cigarettes will continue to decline – albeit at a diminishing rate – throughout the forecast period. Additional increases in excise duty due to public health concerns will be the main driver of this.
During the forecast period, cigarette manufacturers are expected to launch new cigarette products that appeal to young adults of legal smoking age through packaging rejuvenation, advanced technology and flavour capsules. Anticipated new product launches during the early part of the forecast period include Esse Punch Pop, which come in mango flavour capsules and Marlboro Advance with a new packaging design.
Street vendors will remain the leading distribution channel for cigarettes in Indonesia throughout the forecast period. Found on most street corners in urban areas, these kiosks are extremely accessible.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Indonesia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Cigarettes research and analysis database.
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