Tobacco in 2024: The big picture
Tobacco experienced decline in both volume and value terms in Chile in 2024. 2024 was a year of economic contrasts for the country. With a GDP growth rate of 2.6% and an Inflation rate of 4.5%, the economic context continued to put pressure on household budgets. The unemployment rate reached 8.5% in the same period, reflecting ongoing labour market challenges. Additionally, the government's fiscal balance shifted to a 2.8% deficit, limiting public investment. For these reasons, consumer confidence remained relatively low at 41.9 points, one of the worst indices amongst Latin American countries, signalling cautious spending behaviours. Chilean consumers were more selective in their purchases, posing challenges for companies looking to expand their market presence.
2024 key trends
Tobacco volumes showed variable performances depending on the category in 2024. In the case of cigarettes, legal sales declined for another consecutive year due in part to increased penetration of the illicit market, which is causing more and more consumers to abandon legal products. Moreover, consumers displayed an increasing tendency to trade down in cigarettes, causing the mid-priced segment to lose ground to economy brands, whose market share increased. The premium segment proved more resilient, as its core consumers were still able to afford such products. Overall, factors such as the low prices of smuggled and counterfeit products led consumers to opt for the cheapest options, with little concern for the safety of the products. Furthermore, the excise tax increases every year, making the purchase of regular cigarettes increasingly expensive, a factor even more relevant in the context of a slow economic recovery that makes consumers, on average, more conscious of their spending.
Competitive landscape
The competitive landscape in cigarettes is comprised of two companies: British American Tobacco and Philip Morris International, which account for nearly 100% of the industry. The industry faces a considerable challenge from the illicit market, which is growing year after year in Chile due to the fact that it offers significantly lower prices than the retail market, in which packs can cost USD5.00 to USD5.50, while an illegal pack costs between USD1 and USD2 on average. In terms of market share, British American Tobacco remains the dominant market player thanks to a diversified brand portfolio that includes Pall Mall in the economy segment and Lucky Strike and Kent in the premium segment. For its part, Philip Morris only competes with Marlboro and Marlboro Crafted, in the premium and economy segments, respectively.
Retail developments
Small local grocers, including ferias and warehouses, remained the main sales channel for tobacco in Chile in 2024. The channel is particularly important in cigarettes, a position that it has maintained despite the rise of modern formats in recent years. Small local grocers benefits from the convenience of proximity, being present in almost every urban area in Chile, as well as more personal customer service and perceived lower prices. However, the channel’s importance varies across categories.
What next for tobacco?
The tobacco industry faces significant short-term challenges. Regarding cigarettes, the inroads made by the illicit market (which is dominated by smuggling) in domestic trade are notable. Control actions by the police seem to be insufficient in a market that moves millions of Chilean pesos daily, especially in an economic situation in which consumers are looking for products at more affordable prices. Thus, companies are likely to consider exercising considerable caution in their forecasts and preparing for promotions and new packaging launches and line extensions that allow them to meet different budgets.
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Overview:
Understand the latest market trends and future growth opportunities for the Tobacco industry in Chile with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
Data and analysis in this report provides further detailed coverage dedicated to the following key categories, where applicable:
- Cigarettes
- Cigars, Cigarillos and Smoking Tobacco
- Smokeless Tobacco, E-Vapour Products and Heated Tobacco
If you're in the Tobacco industry in Chile, our research will help you to make informed, intelligent decisions; to recognise and profit from opportunity, or to offer resilience amidst market uncertainty.
The Tobacco in Chile report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volume and value sizes, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent research methodology, conducted in-country
This report answers:
- What is the market size of Tobacco in Chile?
- Which are the leading brands in Tobacco in Chile?
- How are products distributed in Tobacco in Chile?
- Which category is the most heavily taxed in Chile?
- How is the operating environment for Tobacco changing?
- What are the current legislative restrictions applicable to the sale of Tobacco products in Chile?
- How has COVID-19 impacted demand?
- How have national lockdown and enforced home seclusion following COVID-19 impacted sales?
- Where is future growth expected to be most dynamic?
Tobacco in Chile
Tobacco in 2024: The big picture
2024 key trends
Competitive landscape
Retail developments
What next for tobacco?
Legislation
Legislative overview
Minimum legal smoking age
Smoking prevalence
Tar levels
Health warnings
Plain packaging
Advertising and sponsorship
Point-of-sale display bans
Smoking in public places
Low ignition propensity (LIP) cigarette regulation
Flavoured tobacco product ban
Reduced harm
Vapour products
PRODUCTION/IMPORTS/EXPORTS
DISCLAIMER
Cigarettes in Chile
KEY DATA FINDINGS
Sales continue to fall amid sustained growth in the illicit market
British American Tobacco competes against the illicit market in Chile, while consumers trade down to cheaper brands
Small local grocers losing ground in the formal market due to the growth of convenience stores
Smuggling set to slow down in the short term
Changes in consumer habits, but, above all, new vaping law presents tough competition for cigarettes in 2025
The short-term competitive environment: lower margins and increased relevance of flavour capsules
Taxation rates
Average cigarette pack price breakdown
Cigars, Cigarillos and Smoking Tobacco in Chile
KEY DATA FINDINGS
Cigars driving growth due to signs of slight economic improvement in 2024
Leading brands are gaining relevance, leaving little room for new competitors
Small local grocers adversely impacted by increased smuggling
Cigarillos offers the greatest potential in the forecast period
Changes in habits slow category growth despite improved economic prospects
Cigars, cigarillos and smoking tobacco remains a traditional category with minimal innovation
Smokeless Tobacco, E-Vapour Products and Heated Tobacco in Chile
KEY DATA FINDINGS
Sustained increase in vaping consumption thanks to greater penetration of single use vapes
In a highly atomised market, it is the most popular brands that gain share
Vaping stores grow thanks to more relaxed oversight by police and better in-person consumer experience
The market set to take off again as a result of new ‘’vaping law’’
Single use vapes will continue to be the fastest-growing products, but e-liquid consumption is not expected to decline anytime soon
Vaping stores face the challenge of reinventing themselves
The following categories and subcategories are included:
Tobacco
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- Fine Cut Cigarettes
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- Cigarettes (Illicit+Legal)
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- Cigars
- Cigarillos
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- Pipe Tobacco
- Fine Cut Tobacco
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- Chewing Tobacco
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- Loose US-Style Moist Snuff
- Portion US-Style Moist Snuff
- Swedish-Style Snus
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- Closed System Single Use
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- Closed System Rechargeable (including starter kits)
- Closed System Cartridges
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- Open Vaping Systems Charging and Vapourising Devices
- E-liquids
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- Tobacco Heating Devices
- Heated Tobacco
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- Nicotine Pouches
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- Closed System Single Use (Illicit+Legal)
- Closed System Cartridges (Illicit+Legal)
- E-Liquids (Illicit+Legal)
Tobacco
Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.
See all of our definitionsWhy buy this report?
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This report originates from Passport, our Tobacco research and analysis database.
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