The dynamics of the market are influenced by the overall macroeconomic conditions, characterised by high inflation and falling purchasing power. In terms of demand, smokers started finding new ways of consuming tobacco, for example buying low-priced brands of cigarettes on weekdays and preferred brands at the weekend or on special occasions.
In 2017 illicit trade showed a sharp decline during the months when the black market exchange was erratic, as smugglers faced greater uncertainty about their profit margins. However, flows of illicit cigarettes were reinstated as soon as the black market exchange rate stabilised, even with the slightest price difference, because the illegal operation is profitable due to the large quantities involved.
Thanks to a strong brand positioned in the mid-price range (Belmont) and a strong distribution system, CA Cigarrera Bigott Sucs remained the most prominent company supplying tobacco in the country. Indeed, the holding company reaches all cities and even the smallest towns through the largest distribution network operating in Venezuela.
Although the choice of distribution channels varies slightly according to the types of tobacco products sold, the convenience of location and widespread presence of traditional grocery retailers gave them a competitive advantage over other options. In Venezuela, bakeries are also part of this channel, but distribution fell in these specific stores due to the high chance of robberies and very low margins.
Venezuela will not resume growth without important changes to the political and economic framework. Under the existing scenario, it is improbable that domestic companies will return to production levels of 2013.
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Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Venezuela with research from Euromonitor's team of in-country analysts.
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This industry report originates from Passport, our Tobacco market research database.