Smokeless Tobacco, E-Vapour Products and Heated Tobacco in Latvia

2020 IMPACT

COVID-19 and more time spent at home benefit sales in 2020

Since their introduction in Latvia in 2018, Philip Morris’ HEETS heated tobacco products have become increasingly popular every year, appealing to smokers as they offer an experience more similar to smoking cigarettes and are perceived to be less harmful. In 2020, COVID-19 and the ban on menthol cigarettes then had an additional positive impact on the market as most HEETS are bought in supermarkets, hypermarkets and other grocery stores that were not closed during the lockdown.

Switch from menthol cigarettes to e-vapour products ensures growth despite reduced product availability

In 2020, the e-vapour category was affected in two ways. Due to the COVID-19 pandemic, the closure of speciality stores reduced their availability.

Philip Morris dominates heated tobacco, being the entry player onto the landscape

Philip Morris Latvia launched HEETS in 2018 and dominates category sales in heated tobacco in 2020, being the only player present in the category. With the launch, the company successfully tapped into its existing economies of scale and invested significantly in marketing support for the new technology by putting it in the hands of local social media influencers.

RECOVERY AND OPPORTUNITIES

Adapted consumer buying habits, health concerns and innovation to fuel growth

With more people working from home in the wake of the COVID-19 pandemic, making it easier to consume tobacco products, it is expected that e-vapour and heated tobacco products will demonstrate positive growth over the forecast period. Increased health concerns, boosted by the outbreak of COVID-19, which have adapted consumers’ buying habits, will also benefit future sales, as will the introduction of more innovations in the market replacing flavoured tobacco products.

Positive prospects for new disposable e-vapour sticks

As disposable e-vapour sticks are entering the market, positive prospects are seen for e-vapour in general, with double-digit growth expected until 2022, before growth falls to single digits across the remaining three years. These products attract customers who do not smoke in general but are interested in experimenting occasionally.

Challenges remain, including high set-up costs

Migration to these products could be stifled due to the high set-up costs of starting these habits, which include investing in expensive devices and supplies. Furthermore, if price points are too high, some users may revert to using smoking tobacco.