Tobacco in Brazil

Tobacco in 2024: The big picture

Tobacco in Brazil witnessed a relatively stable performance in 2024, with few significant changes in terms of product development and distribution. Overall, there was a decline in smoking prevalence driven predominantly by young adults who are becoming more conscious about the health impacts of smoking. Indeed, younger generations are choosing to stop smoking or avoid consuming it in the first place. New national regulatory measures came to the fore in the second half of the year denoting a change in policy. Higher minimum prices and taxes were imposed on cigarettes, after almost a decade of no price adjustments, which culminated in double-digit retail price increases for the cigarettes category. Furthermore, a new law was proposed that would permit retailers to sell cigarettes above the minimum price set by the government, although no official start date was announced. A ban on flavoured cigarettes is still a recurrent topic in the Brazilian tobacco industry, which would potentially have a significant impact on cigarette sales. However, at the start of 2025, the Federal Supreme Court suspended a tender to debate the prohibition of flavoured cigarettes in Brazil.

2024 key trends

Cigarettes remained the largest category in 2024, with continued growth in volume and value terms. Sales of cigarettes increased in the economy, mid-priced and premium segments, with brands in the latter performing more positively. Brazil has a strong tobacco industry and cigarettes are widely distributed across different retailers, enabling the category to thrive. The low penetration of other tobacco products, and the absence of reduced-risk products also supports cigarette sales in Brazil. Moreover, the relatively low price of cigarettes in Brazil is a key contributor to sales growth, despite the significantly higher prices issued in Brazil towards the end of the year. The impact of such pricing measures was limited in 2024; thus, its implications will be mainly seen from 2025 onwards.

Competitive landscape

Souza Cruz SA (British American Tobacco), Philip Morris Brasil Indústria e Comércio Ltda, and JT International do Brasil Ltda are the three leading players in Brazil’s tobacco industry. Due to the absence of legal reduced-harm products in the country, tobacco companies in Brazil remain focused on the cigarettes category. In 2024, Souza Cruz SA maintained its leadership, accounting for more than two thirds of retail volume sales in Brazil. The premium brands Kent and Dunhill and the mid-priced brand Lucky Strike were amongst the best performing lines in 2024. Philip Morris Brasil remained the second largest player, accounting for slightly more than one fifth of retail volume share, mainly driven by the economy brand Chesterfield and the premium brand Marlboro. JT International do Brasil also faced rising volume sales in 2024, due to the stronger performance of its economy brand Winston and mid-priced Camel.

Retail developments

Small local grocers remained the main channel for cigarettes in Brazil, accounting for just under half of retail volume share in 2024. Supermarkets, hypermarkets and forecourt retailers are also key channels for cigarettes. As prices are typically fixed, there is no room for retailers to differentiate through pricing strategies. Nevertheless, two new laws were proposed, which could potentially disrupt the distribution of cigarettes in Brazil. A new law was proposed to allow retailers to sell cigarettes above the minimum levels established. A separate law has been proposed to ban cigarette sales in supermarkets, newspaper kiosks, convenience stores, and establishments in which food is either sold or consumed, amongst other premises. To this date, both laws are still under consideration, and no concrete measures have been undertaken.

What next for tobacco?

There is much debate regarding the future implications of recently implemented and debated regulatory measures in Brazil’s tobacco industry. The double-digit price increases on cigarettes, which emerged in late 2024, have strong implications for consumption across different demographics. Price sensitive consumers could shift towards easily accessible illicit cigarettes, whilst consumers who were already keen to switch away from cigarettes due to health motivations might expedite their transition. Nonetheless, even with the recent price increases, cigarette retail prices in Brazil are still relatively low, and align with the cost of some essential goods and services. Consumers that are less averse to price rises may just continue to purchase cigarettes. However, some doubts have surfaced as to whether the latest price adjustments are just a one-off measure. If further price hikes are placed on cigarettes on a regular basis, there is likely to be a more noticeable reduction in sales.