‘Cigarette Sales to Fall 3% a Year Till 2021’
Kolkata: Cigarette sales in India will continue to be under pressure with government’s tough anti-smoking initiatives and a thriving grey market, says a report by Euromonitor International.
The research agency estimates sales volume declined by 4% last year and is poised to fall 3% every year until 2021, bringing the market down to about 72.6 billion sticks per annum by then from 84.9 billion sticks in 2016.
Euromonitor projects that sales will continue to be under the purview of the government through 2021.
The decline last year was mainly due to further enforcement of regulations across states where it was previously not strictly managed, increase in taxation, and implementation of stringent graphic health warnings covering 85% of the packet against 40% of front of the pack earlier. “In order to curb smoking and limit the harmful effects of this habit, the government is set to continue introducing stricter regulations during the forecast period such as making more use of graphic health warnings, raising levels of taxation and banning public smoking and sales of single cigarettes,” the report said. “These moves by the government are set to continue to discourage new consumers from taking up the smoking habit.”
Tax accounts for over 75% of the price for cigarettes in the economy segment, while it is 50% in case of premium cigarette brands and 43% for mid-priced cigarettes. Euromonitor said consolidation into two main price categories is expected as consumers from the mid-priced segment move to either economy or premium cigarettes. Economy and mid-priced cigarettes accounted for the largest proportion of sales in India in 2016 with a combined volume share of 59%.
“It is estimated that one-third of India’s middle-income consumers would be prepared to switch to premium brands or stay in the mid-priced segment, while the remainder would be more likely to trade down to economy brands,” the report said.