Following the outbreak of COVID-19 in Thailand numerous articles appeared from the government and in the media highlighting the additional health risk of smoking. Given that COVID-19 attacks the respiratory system, health experts stated that smokers would be at greater risk of complications if they contract the virus.
Following the 2017 exercise tax on cigarettes coupled with the economic turbulence caused by the pandemic, price-conscious consumers continued to drive retail volume growth in economy band cigarettes in 2021. Mid-price cigarettes suffered heavy losses as many previous customers traded down to economy options.
Philip Morris (Thailand) Ltd strengthened its already dominant position in cigarettes in Thailand in 2021 thanks to a strong showing from its mid-priced brands L&M Red and L&M Menthol. Following the 2017 lower tax rate of 20% which was introduced for cigarettes priced below THB60, leading multinationals such as Philip Morris and Japan Tobacco International (with its brand Camel) reduced the prices of many of their brands which enabled them to comply with this lower tax levy and avoid the 40% tax applied to higher priced brands.
The demand for cigarettes is expected to continue declining during the forecast period, with sales not only being impacted by the tax increase on economy cigarettes but also the rising awareness about the dangers of smoking and an increase in government-supported anti-smoking campaigns. The outbreak of COVID-19 saw the government increasing its efforts to raise awareness of the dangers of smoking, including highlighting the additional risks to smokers from the virus.
COVID-19 and the measures taken by the government to contain it had a huge impact on Thailand’s economy, with the loss of tourism being particularly significant. Since the government started its roll out of the COVID-19 vaccination programme in 2021, it is hoped that the economy will begin to recover imminently, especially from the point it reopens its borders to tourism.
The overall unit price increase of most brands has caused price-sensitive consumers in cigarettes to switch to economy brands, the cheaper fine cut tobacco (with which consumers roll their own cigarettes) or turn towards illicit trade. In fact, the volume growth rates for illicit trade will remain robust throughout the forecast period despite the government’s efforts to crack down on such sales.
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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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