Tobacco in Vietnam

Tobacco in 2024: The big picture

In 2024, tobacco in Vietnam performed strongly overall. Cigarettes remained the dominant category in tobacco at the end of the review period, supported by stable prices, improved distribution and rising consumer incomes. Key players in tobacco tried to keep their prices as stable as possible so as not to deter consumers, who faced strong pressure on household budgets. In 2024, smokeless tobacco remained a negligible presence in Vietnam. Meanwhile the government's ban on e-vapour products and heated tobacco, effective from January 2025, removes potentially significant alternatives to traditional cigarettes. Meanwhile, smoking tobacco gained further traction in the country. In addition, premium products like cigars saw fast growth in demand due to increased tourism, the presence of specialised cigar stores and consumers wanting luxury experiences. Furthermore, Vietnam’s exports of cigarettes grew rapidly due to favourable trade agreements, competitive pricing and strong demand from markets like South Korea and Indonesia. While rising health awareness is helping to reduce smoking prevalence, tobacco remained widely consumed, with tobacco companies like Vietnam National Tobacco Corp (Vinataba) playing an essential role in ensuring stability in the industry.

2024 key trends

Retail volume and current value sales of tobacco rose strongly in 2024, albeit at slower rates than in 2022 and 2023. In 2024, tobacco in Vietnam faced various challenges, such as economic difficulties and the threat to legal sales of unregulated e-cigarettes. However, key players in the industry, especially Vinataba, were able to overcome such challenges to maintain a strong growth trajectory. Local cigarette companies improved sales through stable prices and leveraging effective distribution in the country. Importantly, Vinataba increased its chances of success by growing its own tobacco leaf, lowering costs and keeping prices steady.

Competitive landscape

The Vietnamese government tightly controlled the tobacco industry through Vietnam National Tobacco Corp (Vinataba). Vinataba remained the dominant player in cigarettes and, therefore tobacco, while also monopolising cigars and cigarillos. It continued to grow its retail volume share significantly in cigarettes in 2024, to consolidate its dominant position in tobacco. International companies like British American Tobacco must partner with Vinataba in joint ventures to produce and sell cigarettes in Vietnam. Because of this government backing and strategic partnerships, Vinataba has a stranglehold on the industry Vietnam.

Retail developments

In 2024, small local grocers continued to dominate the distribution of cigarettes in Vietnam in 2024, despite continuing to lose some retail volume share to food/drink/tobacco specialists, convenience stores and non-retail channels (hospitality (on-trade)). Small local grocers are widely popular because they are conveniently located in areas near consumers' homes, making it quick and easy for people to buy products, including cigarettes, regularly. This traditional format has been a dominant presence in the retail channel in Vietnam. In general, small local grocers leverage convenient locations, personal service and flexible buying options, such as selling cigarettes individually or in small packs, to reach consumers, not least price-sensitive shoppers. As a result, cigarettes players focused on utilising this channel to maximise their reach.

What next for tobacco?

Overall, tobacco in Vietnam is projected to see moderate-to-slow retail volume growth and strong, if gradually slowing, retail value (constant 2024 prices) increases as the forecast period progresses. The government's decision to ban e-cigarettes, effective from 1 January 2025, removes a potentially significant threat to traditional cigarettes. Thus, the ban is predicted to help traditional cigarettes maintain a positive growth trajectory. Many consumers who previously used e-cigarettes are likely to return to traditional cigarettes out of habit, affordability and availability.