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

2021 DEVELOPMENTS

Philip Morris launches first heated tobacco in Morocco

Philip Morris introduced its brand of tobacco heating device, Iqos, in November 2021 via local representative Emirati-Moroccan co for industry & distribution EMID. The company started its new venture by opening five Iqos stores in Casablanca, in which the brand retailed at MAD750, while associated HEETS heated tobacco sticks are sold in different distribution channels such as tobacco specialists and even hypermarkets/supermarkets for MAD35 per unit.

Economic turbulence encourages consumers to switch from cigarettes to e-vapour products

The pandemic played a positive role in the development of e-vapour products in 2021, leading to further impressive current value growth, despite the economic turbulence. In fact, growth can be partly attributed to the economic issues in the country: the additional price increases of cigarettes combined with the shortage and inaccessibility problems, encouraged some consumers to consider alternatives.

Illicit products curb higher retail sales of e-liquids

Since the introduction of e-vapour products in Morocco in 2013, several importers engaged in importing e-liquids, leading to high fragmentation and competition, especially with the entry of cheaper products from China. This led to the rapid expansion of e-vapour products across Morocco, which achieved higher penetration, especially as they became an increasingly fashionable alternative to cigarettes.

Vape Distro leads highly fragmentated e-vapour products

E-vapour products is a highly fragmented competitive landscape, with sales dominated by small independent players that import products. Vape Distro, which originally started its activity by opening its “MyCig” Vape stores in Morocco, soon secured the exclusive right to distribute major brands imported from France and the US.

E-commerce remains dominant channel and benefits from lockdown

With many stores that sell e-vapour products being forced to close due to Morocco’s strict lockdown procedures, it was initially expected that in-store retailing sales would be lower in 2021. However, given that grocery retailers could continue operating and that traditional grocery retailers is the main store-based distribution channel, the latter gained share in 2021.

PROSPECTS AND OPPORTUNITIES

Dynamic growth expected for e-vapour products as greater product penetration is anticipated

Over the forecast period, e-vapour products is expected to record steady growth, as it is still growing from a lower base. E-vapour products remain new to Moroccans and their consumption is limited to major cities such as Casablanca, Rabat and Marrakech.

Heated tobacco likely to gain consumers from cigarettes

The new entry of Iqos and HEETS to heated tobacco products is likely to lead to consumers migrating from cigarettes, especially premium brands. As heated tobacco is relatively new to the country, some of the growth can be attributed to the novelty factor as consumers are keen to try interesting products that have already been launched globally.

Potential threat to e-vapour products from illicit trade

Since the introduction of e-vapour products in Morocco, the local government has only increased tax once, in 2020, which entailed a massive drop in imports and encouraged illicit trade, either of imported products or products produced locally which did not comply with international standards. These products also sell for half the price of quality imported brands through retail.