Cigarettes in Mexico

PROSPECTS

Moderate volume growth but high value growth boosted by new products

Cigarettes posted a moderate contraction in volume terms in 2018, driven by a mix of trends that include a decline in smoking prevalence and in the average number of sticks smoked per day. There was, however, growth in the volume of illicit trade, despite the government’s actions to reduce illegal sales.

Innovation a key driver of consumption

While older adults tend to be brand loyal in cigarettes, young customers are attracted by the different and appealing innovations that are launched each year, such as new flavours, both in capsule and non-capsule form. Younger smokers over the legal smoking age and women are the most attractive consumer groups for cigarettes due to an increase in prevalence.

Regulation having long-term impact on smoking prevalence

In 2018, no new regulations were imposed on cigarettes, although the sum of regulations in force to date include public smoking bans, mandatory graphic warning labels and advertising restrictions, all of which are having an impact on reducing smoking prevalence. The special tax added to cigarettes as a measure to discourage consumption has a limited effect, given the ease at which consumers can buy single sticks for a few pesos from numerous points of sale.

COMPETITIVE LANDSCAPE

Leading players offer flavour innovation

The cigarettes category in Mexico is consolidated between international companies Philip Morris Productos y Servicios and British American Tobacco. Japan Tobacco International Mexico is also present in the country through the Winston brand has a much lower share.

Value pack formats and eye-catching designs used to woo smokers

New product development towards the end of the review period also focused on offering additional value. For instance, for Pall Mall, Shots Montana and Lucky Strike, British American Tobacco launched packs with one extra cigarette free, offering 25 rather than 24 sticks.

Philip Morris consolidates its brand portfolio

One of Philip Morris’s main brands Delicados, which has a long-standing presence in Mexico, has been posting strong share declines in recent years. Much of this stems from preferences among younger smokers for international brands with a fresher look.

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