Constant tax adjustments continued to negatively impact tobacco consumption in 2020. During 2020, the Peruvian government raised the per package tax on cigarettes by 7%, with a second raise already implemented at the beginning of 2021 as well.
In light of the economic fallout of the pandemic, reduced spending power impacted demand in 2020 since many consumers were trading down to the cheaper alternatives or even illicit products. Indeed, there was a general consumer tendency to move towards lower-priced brands as a way to combat the successive price increases as well as the economic crisis.
In light of COVID-19, convenience stores kept growing in presence in 2020, becoming a more and more important point of purchase for cigarettes. In this regard, Philip Morris Perú SA (PMI) is ahead of other players, being present in one of the most important convenience store chains in Peru, Tambo.
2021 is set to be a slow year for cigarettes, with volume growth expected to remain negative and current value growth set to stagnate. Demand is set to rebound in 2022, before normalising through the remainder of the forecast period.
In the medium term, the most significant fallout from COVID-19 will come from the resultant severe economic downturn. Post 2008-2009’s Global Financial Crisis, the cigarettes category saw volumes decline as consumers moved towards cessation, or purchases of cheaper products, such as economy and illicit cigarettes.
New social and health contexts may encourage players to shift their strategies in the forecast period. Indeed, consumers are growing more conscious of health issues, seeking out safer tobacco products.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Peru with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Cigarettes research and analysis database.
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