Tobacco in Uzbekistan

Unfavourable conditions for cigarettes

Tobacco continued to record strong current value growth in 2018, driven by the largest category of cigarettes due to two consecutive tax increases in 2017, along with devaluation of the national currency. This led to a second year of retail volume decline for the category, although 2018 marked somewhat of a recovery after a stronger decline the previous year, with labour migration returning to the country.

UZBAT’s investment in production allows it to export to neighbouring countries

The dominant producer of cigarettes in the country, British American Tobacco Uzbekistan (UZBAT), increased its local production and number of exports in the second half of 2018, despite excise tax on cigarettes produced in the country increasing from UZS37,432 to UZS84,222 per 1,000 units. Production from its Samarkand cigarette factory was exported to neighbouring Kyrgyzstan, Kazakhstan and Mongolia.

UZBAT benefits from local production to retain dominance of cigarettes

British American Tobacco Uzbekistan (UZBAT) retained its dominant leadership of cigarettes in 2018, offering an expansive portfolio of popular brands including Pall Mall, Kent and Rothmans. Due to UZBAT’s local manufacturing facilities, the producer is able to offer the full range of price segments from economy to premium, with more accessible prices compared to imported brands.

Independent small grocers remains leading distribution channel due to convenience

Independent small grocers remained as the leading distribution channel of cigarettes in 2018, although like most of the other channels, it continued to record declining retail volume sales. Tobacco specialists was one of the exceptions to this trend, gaining retail volume share and recording positive growth.

Unit price increases and declining smoking prevalence will further impact demand for cigarettes

Tobacco is predicted to continue to record high current value growth over the forecast period due to ongoing price rises in an attempt by the Uzbekistani government to discourage purchases by making them too expensive for most local price-sensitive consumers. As a result, the largest category of cigarettes is predicted to continue declining in retail volume terms, in addition to declining smoking prevalence amongst adult smokers in the country.

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