Following the outbreak of COVID-19 in Thailand numerous articles appeared from the government and in the media highlighting the additional health threat from the virus to smokers. As COVID-19 attacks the respiratory system, health experts highlighted that this puts smokers at greater risk of complications if they contract the virus.
In 2017 a new excise tax on cigarettes was introduced, with brands selling at THB60 per pack or less taxed at 20%, and those priced above THB60 taxed at the higher rate of 40%. This resulted in a strong drop in demand for mid-priced and premium band cigarettes, while encouraging strengthening demand for economy band cigarettes, a trend that continued into 2020.
Philip Morris (Thailand) Ltd strengthened its dominant position in cigarettes in Thailand in 2020 thanks to a strong showing from its mid-priced brands L&M Red and L&M Menthol. Following the 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 which also continued to record strong volume growth in 2020) 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.
In 2021 the government is due to increase the excise tax on economy cigarettes to 40%, bringing it into line with mid-price and premium band cigarettes. Once this is introduced the average unit price of economy band cigarettes is set to increase sharply, reducing the price gap with mid-price and premium brands.
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. As the government starts the roll out of its COVID-19 vaccination programme in 2021 it is hoped that the economy will start to recover, with the reopening of its borders to tourism being crucial.
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.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Thailand 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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