Tobacco in the Philippines witnessed further decline in volume terms over 2024, in line with the falling smoking prevalence. The higher excise tax on cigarettes pushed up retail prices and deterred consumption, especially among the many consumers still facing high costs of living. Economy cigarette brands performed well in 2024 as many consumers remained cautious with spending and dealt with tighter household budgets. With consumers shifting away from cigarettes, the key players JT International (Philippines) Inc and Phillip Morris Fortune Tobacco Corp have strengthened their partnerships with sari-sari stores and other grocery retailers, in a bid to gain better visibility.
Cigarettes is the largest tobacco category in the Philippines but is losing share amid declining consumption. The category remains challenged by the country’s unitary tax system making it costlier to purchase cigarettes on a per stick basis. Economy and mid-priced cigarettes bear the same level of excise tax as premium cigarette brands, creating high prices of individual sticks across all price bands. Despite its niche status, cigars and cigarillos registered growth and provided some stability for incumbent players. Consumers are less price conscious in this category, consisting of a more affluent base.
Philip Morris Fortune Tobacco Corp remained the most significant player in 2024, despite the decline in cigarette sales. The player holds a strong position in cigarettes due to its nationwide distribution, particularly in sari-sari stores. Marlboro remains the leading tobacco brand benefitting from its premium positioning, while the company is also enjoying dynamic growth in heated tobacco with Iqos, helping to preserve its lead in tobacco overall. The positioning of Iqos as a smoke-free product challenges e-vapour products, with heated tobacco being brought more directly into competition with disposable vapes.
The bulk of cigarettes are sold in small local grocers, as the major players in this category, Philip Morris and JT International have achieved deep penetration of sari-sari stores in the Philippine market. Sari-sari stores offer cigarettes per stick which meets the needs of the many low income consumers, giving them better control over spending on cigarettes as they do not have to commit to a pack of cigarettes. Leading brands such as Camel and Marlboro leverage trade merchandising and offer promotions through raffles within this channel. Incumbent players are also performing well in convenience stores, although modern retail channels are generally less accessible compared to other non-grocery retailers. Philip Morris Fortune Tobacco Corp has leveraged its in-house sales capability to unlock new growth sources within different territories outside Metro Manila. Philip Morris Fortune Tobacco Corp remains unmatched in terms of its sales network in the Philippines.
Tobacco in the Philippines is expected to witness robust value growth over the forecast period as consumers transition to alternative products. By contrast, the ongoing decline in cigarette consumption will weigh on volume performance. E-vapour products offer substantial growth opportunities in line with rising consumer awareness and as incumbent players bolster their efforts to build a business outside of cigarettes. In heated tobacco, Iqos and Ploom are in good strategic positions to spur demand for this alternative product, whereas brands like Black Elite and Chillax could offer greater visibility in closed vaping systems.
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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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