Cigarettes in the Czech Republic

PROSPECTS

Changing lifestyle trends and rising cigarette prices suppress demand

Rising awareness of the harmful effects of smoking on health, combined with the law introducing health warning images and texts on cigarette packs in 2016 contributed to the decreasing smoking prevalence of cigarettes in 2017. Cigarettes’ volume saw gradually slowing growth, but in 2017 witnessed decline.

Smoking ban comes into effect in 2017

The anti-smoking legislation came into effect in May in 2017, banning smoking in restaurants, pubs and other foodservice establishments. The impact of the discomfort of having to smoke outside the restaurant was alleviated by the fact that the application of the law started early in summer and the ban on smoking did not apply to outdoor restaurants’ terraces.

More expensive cigarettes gain share

Given the declining unemployment and rising incomes, a growing number of Czech consumers can afford higher priced cigarettes. Mid-priced and premium cigarettes increased their share in 2017 due to smokers’ loyalty to some of the brands that moved from the economy to mid-priced category.

COMPETITIVE LANDSCAPE

Cigarettes faces increasing competition from other tobacco categories

As a result of continuously rising cigarette prices, price-sensitive consumers are increasingly switching to fine cut tobacco which, due to less tax imposed, provides a cheaper alternative. The largest tobacco companies in the Czech Republic are expanding their fine cut tobacco offering and selling the most popular cigarette brands also as fine cut tobacco.

Philip Morris CR maintains its leading position in 2017

The top three players, Philip Morris CR, British American Tobacco CR and Imperial Tobacco CR continued to dominate the cigarette competitive landscape in 2017. All leading companies offer well-represented product portfolios serving the majority of cigarette smokers in the Czech Republic.

Smoking ban introduced in 2017 weakens cigarette competitiveness vis-à-vis other tobacco categories

The law banning smoking in pubs, restaurants and other public areas puts cigarettes at a competitive disadvantage vis-à-vis smokeless tobacco and vapour products, which are allowed to be used indoors. Cigarette companies are expected to see some migration of cigarette smokers to vapour products.

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