While retail volume sales of cigarettes witnessed some growth in 2020, overall demand was fairly subdued compared to illicit trade which recorded a much stronger performance due to rising financial concerns among some smokers. Nevertheless, faced with unknown periods of home seclusion and lockdown as well as reduced movement and the fear of infection during an unprecedented health crisis, consumers turned to stockpiling their favourite brands for fear of stock shortages as the COVID-19 pandemic affected stock availability in many retail outlets.
Brand owners are increasingly looking to gain a price-led competitive advantage. Price positioning is increasingly deployed with the increase in taxation and overall shift towards more affordable brands due to tightening budgets, a trend that not only supported further share gain for economy cigarettes but also demand for illicit trade.
Since the pandemic and subsequent restrictions to control the spread of the virus did not change the operating times of hypermarkets which were open throughout, the route to purchase shifted towards consumers adding cigarettes to their baskets when they did their weekly grocery shop. This trend continued into 2021 to the detriment of supermarkets, which lost share compared to 2020, although overall retail volume sales remained above pre-pandemic levels, while tobacco specialists continued to lose ground.
Recently-launched heated tobacco and e-vapour products in the United Arab Emirates will continue to gain local consumers’ attention over the forecast period, although they are unlikely to pose a significant threat to cigarettes as the latter dominates sales of tobacco. Smoking prevalence is expected to remain sturdy.
Possible price increases due to inflation and a further shift towards perceived low risk products are expected to impact the category, leading to undynamic retail volume growth for cigarettes over the forecast period. An increasing number of consumers are opting for cheaper alternatives with tightening budgets, including fine cut tobacco for consumers who are content with rolling their own cigarettes.
With the development of e-commerce in the United Arab Emirates, it is likely that companies will seek permission to sell cigarettes via the online platform. This is permitted for the new category of heated tobacco products whereby companies such as British American Tobacco and Philip Morris are utilising the channel to sell their new-generation devices with the option of home delivery.
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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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