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Cigarettes in the Middle East and Africa

September 2019

The Middle East and African region recorded the fastest growth globally as the smoking population is progressively increasing. The cigarette industry remains highly consolidated as internationally recognised brands remain dominant. Local brands within economy priced remain popular owing to increased taxation leading to consumers downtrading. Growth in volume and value terms will remain strong over the forecast period despite the threat from illicit trade.

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Key findings

Tougher legislation changes landscape of tobacco market

Increased taxes on cigarettes resulted in large-scale price hikes and consumers trading down to cheaper alternatives. Consequently, there were anticipated price increases due to expected increased production costs. However, this is unlikely to cause much change in demand or growth as the region’s smoking prevalence remains high. To some extent, this has impacted on the prevalence of the illicit trade as price-sensitive consumers are opting for cheaper cigarettes.

Burgeoning MEA market presents opportunities for industry players

Contrary to the global trend of decreasing volumes, the MEA region boasts rapid growth in volume and value terms. With the growing young adult population, changing perspectives of females smokers and openness of trade enables international players to partner with local producers for distribution.

Domestic production taking the lead in Middle Eastern countries

In line with increased taxes and due to imports, it has been observed that some companies opted to reduce imports and instead focus on local manufactured brands by investing in production facilities as well as increasing distribution of local brands.

Menthol offerings growing in popularity among consumers keen on trying out new variants

Across the region the emergence of menthol offerings has seen these flavoured brands become the preferred variant. These offerings are particularly popular among new smokers who enjoy the flavoured offering more than conventional cigarettes.

Other grocery retailers and independent small grocers remain dominant points of purchase

Other grocery retailers and small independent grocers are found throughout the region, notably in both rural and urban areas. While sales in the formal channel are restricted by bans on advertising and sales of single sticks remain evident, these factors are less governed/implemented in less formal channels such as grocery retailers and independent small grocers.

Introduction

Scope
Key findings

Regional Overview

Middle East and Africa presents an opportunity for tobacco industry
Increased smoking population driving robust growth in MEA
Egypt demonstrates strong growth over the review period
Consumer demand for premiumisation impacts cigarette market
High variation in 20s pack size enables innovation
Consumer preferences spur growth of 20s pack size in MEA
Other grocery retailers dominate as the preferred channel
Geographic proximity and convenience stimulates growth

Leading Companies and Brands

Tax increases resulting in volume declines for leading players
International players facing increased competition from domestic players
Increased innovation and wide distribution remain paramount
Price increases due to taxes resulting in shift to more affordable brands

Forecast Projections

Egypt leading in terms of increased smoking prevalence
Increased taxes and restrictive legislation expected to curb volume growth

Country Snapshots

Algeria: market context
Algeria: competitive and retail landscape
Cameroon: market context
Cameroon: competitive and retail landscape
Israel: market context
Israel: competitive and retail landscape
Kenya: market context
Kenya: competitive and retail landscape
Nigeria: market context
Nigeria: competitive and retail landscape
Saudi Arabia: market context
Saudi Arabia: competitive and retail landscape
South Africa: market context
South Africa: competitive and retail landscape
Tunisia: market context
Tunisia: competitive and retail landscape
United Arab Emirates: market context
United Arab Emirates: competitive and retail landscape
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