Making competition-led price moves, BAT revised the price of its Dunhill Core, reducing it from SAR28 to SAR19. Because of this, sales of the brand received a boost, supported by the biggest ever scale of activation and consumer trials.
With the implementation of plain packaging, it has become more difficult to differentiate and keep brands relevant to consumers. With the ban on traditional offline marketing of cigarettes, and the implementation of plain packaging, tobacco companies are now utilising the digital medium to engage with potential customers and inform them about product features and pricing details.
Companies, unable to use traditional communication methods, also rely on brand activists to attract consumers with incentives/gifts such as lighters and gifts upon purchase of a certain brand. With the onset of the pandemic, social distancing rules and limitations on the number of people allowed in stores at one time led brand activation activities to be reduced to almost zero when the restrictions were at their peak.
Owing to increasing living costs in the country, the increase in VAT and the consequent shift in consumers’ purchasing behaviour, it is expected that brands will consider launching more value for money brands, especially priced in the mid-priced range. Companies are likely to add new flavour extensions to existing cigarette families, as well as discontinue brands that are seeing poor sales.
The Ministry of Municipal and Rural Affairs has granted permission to grocery stores and supermarkets to sell cigarettes; however, this must be in a separate cubicle. Tobacco companies have already received permission to sell in Lulu Hypermarkets, Carrefour and Tamimi Hypermarkets, whilst talks with Danube and Panda are still ongoing.
Whilst the recent launches of heated tobacco and e-vapour products will attract consumers’ attention in the forecast period, it is expected that they will not pose any serious threat to sales of cigarettes, which will remain the largest tobacco category. It is expected that smoking prevalence will remain solid, and the actual number of smokers will increase.
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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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