Tobacco in Kuwait

Tobacco in 2024: The big picture

Polarisation was a key feature of tobacco in Kuwait in 2024. There was higher popularity for premium brands in cigarettes and cigars and cigarillos among higher-income consumers, while inflationary pressures and rising prices led to trading down to standard and economy brands. Economic disparity remained stark in Kuwait, with the wealthiest residents living in luxury and low-income foreign workers surviving on as little as KWD80.00 per month. Furthermore, Kuwaiti nationals benefit from extensive subsidies, such as for housing, fuel, groceries and healthcare, not afforded to most expatriates. The combination of high-income levels and relatively low taxes kept tobacco affordable for most people in Kuwait. However, this trend may reverse once Kuwait implements a 100% excise tax on tobacco products, agreed upon by Gulf Cooperation Council (GCC) Member States in 2017. Kuwait is the last GCC Member State to enact this tax. While the impact is uncertain, it is expected to reduce legal tobacco consumption. The wealth gap between affluent Kuwaitis and lower-income expatriates is also reflected in tobacco consumption patterns. While wealthier Kuwaitis often smoke premium brands like Marlboro and Dunhill and frequent upscale shisha cafés, low-income earners opt for more affordable brands, such as Ace or Gold Leaf. Tobacco use is more prevalent among men than women, influenced by cultural norms that discourage women from smoking publicly, particularly within conservative families.

2024 key trends

Retail volume sales of tobacco fell strongly in 2024, while retail current value sales decreased slightly. The decline in tobacco’s retail volume sales was driven by higher health consciousness among some consumers, with a strong downturn in cigarettes, for example. Cigarettes suffered competition from emerging tobacco categories like e-vapour products, shaped by rising health awareness amongst older and, to a lesser extent, young people of legal smoking age. Despite the decline in cigarettes consumption in 2024, Kuwait continued to lead the GCC in terms of smoking prevalence, with a high share of men, albeit small share of women classified as regular smokers. Men are much more likely than women to smoke, partly due to the stigma attached to women smoking in public. In rural areas, consumers are less aware of the harmful effects of smoking and so they are often heavier smokers than those living in urban areas. Some younger consumers of legal smoking age have become more likely to smoke cigarettes and vape with the growing visibility of celebrities and influencers smoking and vaping within the music and film industries.

Competitive landscape

Philip Morris Management Services (Middle East) Ltd increased its retail volume share significantly in 2024 to consolidate its clear leadership of cigarettes in Kuwait. The player leveraged a diversified portfolio of premium, standard and economy brands.

Retail developments

Hypermarkets was the leading distribution channel in cigarettes in 2024, followed by supermarkets, with both seeing only a marginal drop in retail volume share. Traditional grocery retailers were also popular, led by small local grocers and food/drink/tobacco specialists. Convenience stores and retail e-commerce were of very marginal-to-slight importance in terms of the distribution of cigarettes. Importantly, cigarettes remained relatively affordable in Kuwait despite recent inflationary pressures and price hikes. Smokers in Kuwait continued to benefit from the absence of a 100% excise tax on tobacco, a move that is about to be implemented over the forecast period, This will align with other countries in the GCC, which have already implemented such an excise tax on cigarettes. Kuwait only levies an import duty on tobacco products, whereby the import duty is 100% of the cost, insurance and freight (CIF) value.

What next for tobacco?

Tobacco is set to see a moderately negative retail volume CAGR, but a slightly positive retail value (constant 2024 prices) CAGR over the forecast period. The growth performance of the dominant category, cigarettes, is predicted to remain in line with that of tobacco overall. Cigarettes’ forecast is influenced by rising health consciousness driving lower consumption and shifting smoking preferences towards more modern alternatives like e-vapour products and heated tobacco. A rebound in premiumisation terms is set to push positive retail value growth, despite steady declines in retail volume sales.