As a result of the COVID-19 crisis, contraband has gained a very important position in the Peruvian market, dramatically expanding its share of overall volumes to surpass the share held by the legal market in 2020 and seeing further share growth in 2021. Cigarettes consumption has migrated to less expensive versions of premium brands, with those of the illicit market being amongst the most preferred by consumers.
In 2021, British American Tobacco’s Lucky Strike brand enlarged the size of its cigarettes from 83 to 94 mm and renewed its packaging design. In addition, the company launched Energy Charged single-cap, energy drink-flavoured cigarettes, a product targeted at smokers aged between 18 and 30 years of age.
Traditional grocery stores predominate as the preferred distribution channel for cigarette sales. Compared with the previous year, 2021 saw this type of outlet increase its share of overall cigarettes volume sales.
Faced with an increasingly complex and challenging context for the industry, brands are aiming at marketing strategies that seek to develop the premium segment versus the economy segment in order to generate higher sales margins. This would help to make the products more attractive to stores, in addition to the fact that there is a differentiation component that is highly valued by young adult consumers of legal smoking age.
The main competitors in the Peruvian market, British American Tobacco and Philip Morris, are set to continue with awareness-raising actions related to the negative impact of smuggling, as well as communication actions related to the responsible consumption of cigarettes, a market that is shrinking every year due to changes in people's habits.
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 tobacco products that are perceived to be less harmful.
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RETAIL SALES OF DUTY PAID CIGARETTES The definition of cigarettes for the purposes of this study is duty-paid, machine manufactured white-stick products. This does not exclude brands of cigarettes that do not use white paper but it is designed to exclude the volume of non-machine manufactured products such as bidis/beedis (India) and papirosy (Russia), and other smoking products made with tobacco but that either do not resemble cigarettes as recognised in the US or Europe, or those that are not machine manufactured. The exclusion of these products is intended to give a more accurate picture of the "true" market for cigarettes and cigars which has been distorted in official statistics and published reports because of the inclusion of hybrid products. NB Please note that due to its central importance and integration into the industry mainstream, Indonesia’s market data does include hand-rolled kreteks DUTY-FREE sales are excluded from retail sales, as are herbal cigarettes. ILLICIT TRADE CIGARETTES Not included in retail sales, but split out separately in volume terms only. Defined as non-duty paid cigarettes (includes smuggled & counterfeit/fake products combined). Legitimate cross-border sales are considered duty-paid. Sales arising from a foreign national purchasing cheaper cigarettes in bulk in a neighbouring country for personal use and exported back are attributed to the country where the purchase is made (e.g. bulk cigarette sales by British nationals in France are attributed to France).See All of Our Definitions
This report originates from Passport, our Cigarettes research and analysis database.
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