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Strategy Briefing

Tobacco: The End of Latin America as a Growth Region?

46 pages, May 2013

US$1,200

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About This Report

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A plethora of ever harsher anti-smoking measures is on the whole causing tobacco volumes in the region to decline but this is not the whole story. On the one hand pockets of legal tobacco growth remain, benefiting from rising incomes, but on the other hand there is substantial increase in illicit sales where financial measures such as growing taxation hit home. Moreover the number of smokers continues to rise (even though penetration is down), keeping the market from a sharper pace of decline.

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Overview

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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

Fast pace of decline rivals Western trends

Latin America saw a significant decline in tobacco volumes in 2011, at a pace similar to that seen in developed economies, with legislation, taxes and health campaigns all playing a part. Mexico is driving the regional trend.

Legislation hitting home

Anti-smoking regulations in Latin America have expanded significantly, with the greatest changes being caused by widespread smoking bans in workplaces, restaurants and enclosed venues.

Tax regimes getting harsher

Although variable across the region, there is a trend toward more restrictive tax regimes driving up the price of cigarettes, causing both a reduction in smokers but also growth in illicit sales.

Still pockets of growth

Argentina is bucking the regional trend of decline or static growth, and cigarette volumes continue to rise as the real price of cigarettes falls and consumers become more affluent.

Menthol on its way out

New world-leading legislation in Brazil (and Chile) will mark the end of menthol cigarettes here and remove one of the globe’s major menthol markets.

Illicit a growing issue

Rising prices are driving an increase in illicit trade in a region where borders are notoriously lax and smuggling is rife. Historically, low prices have kept this issue at bay but this is set to change.

Innovation limited to pack size

There is very limited innovation in the region, with advertising restrictions hampering product launches and the Brazilian menthol ban halting sales in the growing flavour capsule market. Pack size is therefore the main focus.

Latin America remains a major source market

Despite a trend away from tobacco consumption, tobacco remains a key industry for the region, with Brazil remaining the world’s leading tobacco exporter.

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Introduction

Scope

Key findings

Region and Country H ighlights

Latin America sees decline on a par with the west

Region and Country Highlights

Still some growth in the market despite a shrinking region

Loss of social acceptability will see Mexico will drive volume down

Legislation and taxes drive Mexico into decline

Brazil is a major exporter

Harsher legislation to put premium on smoking in Brazil

Fall in real price drives volume growth in Argentina

Indigenous tobacco products in Latin America: Venezuela’s chimó

Smoking Prevalence

Latin America sees smokers rise but smoking prevalence decline

Number of smokers rising but is the habit growing?

Legislation Overview

Latin America: Summary table

Bans set to make smoking invisible

Brazilian ban will have a major impact on menthol volume

Low tar trend but high tar still dominates in some markets

Taxation and Price

Cigarettes: Global price analysis

Rising affluence lessens the impact of tax-related price rises

Rising incomes make premium brands more affordable

Some volume growth despite tax increases

Illicit Trade

Latin America takes more than its fair share of illicit sales

Illicit trade on a major scale in Brazil

Company and Brand Shares

A two-horse race in Latin America

Colombian acquisition helps BAT to sustain leadership

Brand share performance

BAT has more top brands but does not lead

Cigarettes Innovation

Pack size the most widespread innovation

Pack size a key marketing tool - for now

OTP: Cigars and Cigarillos

Dominican Republic cigars: Giving it large

Latin America the home of cigar production

Traditional market means innovation is limited

Channel Analysis

Small outlets still dominate Latin American distribution

Some examples of typical distribution channels

Prospects

A changing landscape as anti-smoking policy builds

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Megatrends

Strategy Briefing

Tobacco: The End of Latin America as a Growth Region?

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Fast pace of decline rivals Western trends

Legislation hitting home

Tax regimes getting harsher

Still pockets of growth

Menthol on its way out

Illicit a growing issue

Innovation limited to pack size

Latin America remains a major source market

Want to find out more about this report?

Table of Contents

Introduction

Scope

Key findings

Region and Country H ighlights

Latin America sees decline on a par with the west

Region and Country Highlights

Still some growth in the market despite a shrinking region

Loss of social acceptability will see Mexico will drive volume down

Legislation and taxes drive Mexico into decline

Brazil is a major exporter

Harsher legislation to put premium on smoking in Brazil

Fall in real price drives volume growth in Argentina

Indigenous tobacco products in Latin America: Venezuela’s chimó

Smoking Prevalence

Latin America sees smokers rise but smoking prevalence decline

Number of smokers rising but is the habit growing?

Legislation Overview

Latin America: Summary table

Bans set to make smoking invisible

Brazilian ban will have a major impact on menthol volume

Low tar trend but high tar still dominates in some markets

Taxation and Price

Cigarettes: Global price analysis

Rising affluence lessens the impact of tax-related price rises

Rising incomes make premium brands more affordable

Some volume growth despite tax increases

Illicit Trade

Latin America takes more than its fair share of illicit sales

Illicit trade on a major scale in Brazil

Company and Brand Shares

A two-horse race in Latin America

Colombian acquisition helps BAT to sustain leadership

Brand share performance

BAT has more top brands but does not lead

Cigarettes Innovation

Pack size the most widespread innovation

Pack size a key marketing tool - for now

OTP: Cigars and Cigarillos

Dominican Republic cigars: Giving it large

Latin America the home of cigar production

Traditional market means innovation is limited

Channel Analysis

Small outlets still dominate Latin American distribution

Some examples of typical distribution channels

Prospects

A changing landscape as anti-smoking policy builds

Why buy this report?

Want to find out more about this report?

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