Tobacco volume sales returned to growth in Sri Lanka in 2024 after a significant decline in the previous year. Value sales rose significantly faster than volumes during 2024 as a result of the government's more aggressive tax policies, which have increased costs and decreased demand. Ceylon Tobacco Company (CTC) continues to hold monopoly status in the market, with the John Player Gold Leaf brand dominating. The illegal trade, primarily suitcase cigarettes, and the unregulated beedi sector, which matches cigarette volumes because of its accessibility and inexpensive prices, complicates the whole picture.
The tobacco sector in Sri Lanka had difficulties in 2024 as a result of stringent laws, significant inflation, and shifting customer preferences. Although CTC remained dominant, rising prices exerted a downward pressure on demand, especially amongst lower-income populations. E-vapour products remained marginal in the market at the end of the review period due to regulatory uncertainty, lack of clear import guidelines, and limited public awareness. While there is growing curiosity in urban areas, legal ambiguity and enforcement gaps have stifled formal market development.
The emergence of beedi and suitcase cigarettes challenged CTC's market dominance in 2024 even though it remained the legal monopoly. The John Player Gold Leaf brand continued to dominate, while premium brands like Benson & Hedges showed slower movement. Meanwhile, Capson managed to retain the loyalty of smokers with lower incomes.
Tobacco sales are mostly dependent on well-established networks of shops, primarily small local grocers, with little room for dramatic changes in the retail landscape because of the lack of options for product display and advertising. However, the volume throughput of these outlets has been impacted by customers trading down to less expensive options and economic distress. Some stores reported lower foot traffic as a result of affordability worries towards the end of the review period.
While tobacco volume sales are set to continue to rise slowly over the forecast period, the long-term expectation is that tobacco use will decline as a result of the ongoing tightening of regulatory restrictions, increased anti-smoking programmes, and anticipated restrictions on e-cigarettes and other nicotine products. Inflation-driven price hikes are expected to drive value growth ahead of the rise in volumes. As legal tobacco becomes more expensive, the illicit trade, including smuggled cigarettes, beedis, and unregulated smokeless tobacco, is expected to expand, especially in rural and low-income areas. Baggage imports and cross-border smuggling will continue to undermine legal sales, prompting calls for stronger customs enforcement.
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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 definitionsThis report originates from Passport, our Tobacco research and analysis database.
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