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Cigarettes in Latin America

August 2020

Cigarettes are set to decrease over the forecast period due to increasing regulatory and socioeconomic pressures. Consumers are increasingly trading down or preferring the illicit market. International brands are well placed to capture growth via innovations and flavouring. Coronavirus impact will be more severe in countries where distribution and supply have been impacted. In-home consumption and non-social occasions may increase because of stress and anxiety.

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Key findings

COVID-19 impact to be limited in the short term and moderate in the long term

The impact of COVID-19 will be more severe in countries where distribution and supply have been impacted such as Chile, Argentina and Peru. Consumers will adapt to in-home consumption and non-social occasions and may increasingly smoke because of stress and anxiety. However, the region had already seen a review period of mainly negative growth.

Trading down will characterise the regional market

Across the region consumers are looking to more affordable products to sustain their smoking habits. With few exceptions this has resulted in a general down-trade in the market. However, the price band benefiting from this varies from country to country and includes the illicit market. This trend is set to accelerate after the COVID-19 pandemic.

Flavour capsules and other innovations are key to adding value

One important pocket of growth for cigarettes in the region is flavour capsules. In Chile, this market segment proves to be resilient and continues to increase in volume and value terms. We should expect even more innovation in flavours and delivery of nicotine over the forecast period.

Traditional and proximity channels are key to win in cigarettes

Independent small grocers are increasingly relevant for consumers in Latin America, especially during the COVID-19 pandemic, as consumers seek an affordable and convenient channel to make their purchases. This channel is also key competing against illicit markets.

Illicit markets see growth due to higher taxes and greater availability

Price increases, often fuelled by higher taxes coupled with greater availability via informal channels, contribute to the rapid growth of illicit cigarettes in the region, specifically in Ecuador and Peru. This will strengthen the tobacco lobby’s hand in conversations regarding the amount the category can feasibly be taxed.

Introduction

Scope
Key findings

Regional Overview

The illicit market snuffs out growth in Latin America
Regulation and high prices limit Latin America cigarettes consumption
Brazil sees rapid spike in volume as consumers look for affordable options
Region is divided among value-seeking and price-sensitive consumers (1)
Region is divided among value-seeking and price-sensitive consumers (2)
Mexico leads flavour innovations with triple capsules
Traditional channels will play a key role in distribution of cigarettes
COVID-19 crisis will affect distribution and occasion consumptions

Leading Companies and Brands

Local companies erode the share of multinationals
Brand unification is the main strategy across the region

Forecast Projections

COVID-19 impact will accelerate ongoing trends (1)
COVID-19 impact will accelerate ongoing trends (2)

Country Snapshots

Argentina: market context
Argentina: competitive and retail landscape
Bolivia: market context
Bolivia: competitive and retail landscape
Brazil: market context
Brazil: competitive and retail landscape
Chile: market context
Chile: competitive and retail landscape
Colombia: market context
Colombia: competitive and retail landscape
Costa Rica: market context
Costa Rica: competitive and retail landscape
Dominican Republic: market context
Dominican Republic: competitive and retail landscape
Ecuador: market context
Ecuador: competitive and retail landscape
Guatemala: market context
Guatemala: competitive and retail landscape
Peru: market context
Peru: competitive and retail landscape
Uruguay: market context
Uruguay: competitive and retail landscape

Appendix: Competitor Analytics

Competitor Analytics tool
Overview
Competitors
Market overlap
Treemap
Overlap matrices

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models

Appendix: Via Pricing

About Via Pricing from Euromonitor International
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