In 2020, cigarettes recorded a sharp decline in sales following the spread of COVID-19, as the pandemic significantly reduced opportunities to smoke cigarettes outside the home. As a measure to prevent the pandemic, the government encouraged people to stay home and to work from home as much as possible, which, inevitably, led people to spend more time at home.
The consumer shift from cigarettes to cigarillos was another reason for the double-digit decline sales in 2020. In December 2017, the government announced a reform of the tobacco tax scheme from 2018 to 2022, to increase taxes on cigarettes and heated tobacco.
Japan Tobacco Inc retained its dominant position in cigarettes in 2020 with the domestic producer offering a wide selection of brands, while the Japanese Government also plays an important role in the company. The government holds a 33% stake in Japan Tobacco (having reduced its stake from 50% in 2013), which is the only company allowed to produce cigarettes in Japan.
COVID-19 will continue to have a significant impact on demand and sales in the forecast period. In Japan, the number of cases of COVID-19 is still rising.
The last stage of the government’s tax increase is scheduled for October 2021, which will have a further negative impact on demand and sales. This is the third and final stage of tax increases, which started in 2018.
While a sharp decline is expected in 2021, decline is expected to slow down from 2022 onwards. The first reason is the end of the tax hike, which started in 2018 in three stages.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Japan 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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