COVID-19 had no significant impact on demand for cigarettes in Pakistan, with supply remaining largely unaffected by the pandemic, and no major disruptions to distribution in terms of accessibility. However, retail volume sales recorded another year of decline in 2020 in a continuation of a trend already emerging towards the end of the review period in line with the government’s attempts to lower smoking prevalence in the country amongst the adult population.
The distribution of cigarettes remained mostly stable in 2020, with newsagent-tobacconists/kiosks and street vendors remaining the most popular distribution channels, as they provide convenience and ease of purchase, although the latter gained share from the dominant newsagent-tobacconists/kiosks. Smaller channels including hypermarkets also gained marginal ground in urban areas, as did independent small grocers which benefit from proximity to local neighbourhoods, a relevant factor when consumers were attempting to stay close to their homes during the lockdown.
Pakistan Tobacco Co Ltd strengthened its dominance of cigarettes in 2020, gaining retail volume share through its brand portfolio which it locally represents for British American Tobacco Plc, and includes leading cigarette brand Capstan By Pall Mall, which has an economy positioning that is primarily targeted at lower-income consumers. The brand has continued to gain share and popularity amongst this demographic over the review period, not only due to its competitive price positioning but also due to the success of various strategies employed by Pakistan Tobacco Co.
With tax hikes expected to continue over the forecast period, the price differential between illicit and legal cigarettes will continue to widen, resulting in further declines for retail volume sales. On the other hand, illicit trade is predicted to strengthen its penetration of the market and gain greater share from the legal segment in the absence of the implementation of an effective track and trace system.
While smoking prevalence is predicted to marginally decline over the forecast period, the actual number of adult smokers will rise in line with predicted population growth in Pakistan. While men will continue to dominate the adult smoking population, there will be a slight shift towards women, supported by a further expected rise in their participation in the local workforce, and therefore offering greater financial freedom.
There is no legislation in Pakistan to limit the tar yield per cigarette and none is expected to be introduced over the forecast period. Therefore, high tar yield cigarettes will remain readily available in the country for the foreseeable future.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Pakistan with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
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This report originates from Passport, our Cigarettes research and analysis database.
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