Cigarettes in Uruguay

PROSPECTS

Aggressive tobacco control policies will continue to fuel volume sales decline

The declining trend in cigarettes retail volume sales in Uruguay will persist over the forecast period, with the pace of decline projected to be faster than during the review period. Demand in the category will continue to fall as the government pursues aggressive tobacco control policies in an effort to further reduce smoking prevalence.

Rising cost of legal cigarettes set to boost illicit trade

As tax hikes cause retail unit prices for cigarettes to increase, it is expected that illicit trade will continue to grow steadily in volume terms throughout the forecast period. Illicit cigarettes are already widely sold across Uruguay, often for less than half the price of legal products, with 51, Eco and Milenio being the most popular illicit brands.

Implementation of plain packaging law likely to discourage innovation

While Uruguay already has some of the toughest tobacco control laws in the world, local legislation in this area look set to become more restrictive over the forecast period. Most notably, a law mandating that all tobacco products sold in the country have plain packaging is due to come into effect at the end of 2019.

COMPETITIVE LANDSCAPE

Monte Paz continues to dominate cigarettes in Uruguay

Local company Monte Paz continued to dominate cigarettes in retail volume sales terms in 2018, and remained the only player in the category to produce its brands in Uruguay. Its only legitimate competitors are Abal Hnos, a Philip Morris subsidiary, and British American Tobacco.

Little potential for new entries or gains by smaller players

The retail volume shares held by Abal Hnos and British American Tobacco in cigarettes remained much smaller than that of the category leader in 2018. This is not expected to change over the forecast period, as restrictive tobacco control laws will continue to make it very difficult for these players to challenge the near-monopoly position of Monte Paz.

Plain packaging decree spurs political debate over cigarette pack types

After President Tabaré Vázquez signed a decree mandating plain packaging for tobacco products in Uruguay in late 2018, there was some debate as to the criteria cigarettes brands will have to adhere to in terms of pack types. The Ministry of Public Health settled on hard packs (ie made from cardboard), which are the only type used by imported multinational brands.

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