Cigarettes in Peru

PROSPECTS

Major tax increases impacting demand

Recent tax increases continued to result in lower formal consumption and higher demand for illegal products within cigarettes in Peru in 2018. Despite efforts by the authorities to seize illegal products, illicit trade continues to increase.

Intensifying anti-tobacco measures

Cigarette consumption is also being negatively impacted by government initiatives such as label warning images and the 2018 tobacco tax increase. Additionally, there is also a threat of increasing illegal cigarettes consumption stemming from smuggling and street vendors.

Convenience stores gaining distribution share

The dominant distribution channel in cigarettes is independent small grocers. However, convenience stores are gradually gaining sales share.

COMPETITIVE LANDSCAPE

Sales continue to be dominated by British American Tobacco

BAT imports and distributes eight cigarette brands throughout the country: Lucky Strike, Pall Mall, Hamilton, Winston, ShuangXi, Nacional, Inca and Premier. However, Pall Mall was the only brand to see a rise in sales in 2018 due to its value for money positioning.

Distribution key to performance

Tobacco companies need wide coverage as their cigarettes are mainly commercialised in independent small grocers, with sales being spread far throughout the country. The lack of good distribution could be another reason why sales are decreasing.

New innovative capsule cigarettes attracting consumers

Flavour capsules continue to lead innovation in cigarettes, with the volume share of such products rising further. Philip Morris Perú offers a capsule product in the mid-priced segment, while BAT does not yet offer such an innovation in this price segment.

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