The number of legal cigarettes released for consumption in Latvia increased slightly in 2018 compared with 2017. To a large extent this was thanks to local authorities being effective in fighting illegal imports.
The growing sales of cheaper make-your-own tobacco products, especially fine cut tobacco, indicate the continuing migration of price-sensitive traditional smokers from cigarettes. Despite disposable income rising in the country, cigarette prices remain increasingly unaffordable owing to regular tax hikes.
Following the implementation of the EU directive banning flavour capsules from May 2017 and menthol cigarettes from 2020, the categories have stagnated or declined slightly as producers are unwilling to invest further in innovation. Additionally, younger consumers who would normally be attracted by the flavoured alternatives are largely captured either by e-vapour products or flavoured fine cut tobacco, the flavour-mixing concept of which offers more opportunities for self-expression.
The Caines brand jumped up into the top 10 rankings by volume share in 2018. Owned on a global level by British American Tobacco Plc, Caines achieved considerable sales growth thanks to consumers’ increasing preference for cigarettes perceived as higher quality.
While Philip Morris Latvia SIA saw its retail volume share decline in 2018, it remained the clear leader in cigarettes. Baltic Sales Network Sia – the official representative of Japan Tobacco Inc – continued to gain share, due to the strong and stable positions of Winston and LD, both in the mid-priced segment, the largest price band in Latvian cigarettes.
An anticipated ban on tobacco displays in stores is expected to make launching new products extremely challenging. It is likely that the brands best placed to survive such a cut in visual communication would be well-established names by key players, such as Philip Morris and British American Tobacco (through its subsidiaries).
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This industry report originates from Passport, our Tobacco market research database.