Tobacco in Peru

Euromonitor International
August 2020
TOBACCO IN PERU Passport i

LIST OF CONTENTS AND TABLES

EXECUTIVE SUMMARY .............................................................................................................. 1
COVID-19 impact on tobacco ................................................................................................... 1
COVID-19 country impact ......................................................................................................... 1
As more consumers shift to illicit products, convenience stores gain popularity for official sales1
Only the young e-vapour products category has some level of fragmentation, cigar players
invest in advertising and promotion .......................................................................................... 2
Increased health awareness likely post-pandemic, players to combat illicit products’ low prices
with increasingly convenient availability .................................................................................... 2
OPERATING ENVIRONMENT ..................................................................................................... 3
Legislation ................................................................................................................................ 3
Summary 1 Legislation Summary at a Glance ................................................................ 3
Minimum legal smoking age ..................................................................................................... 4
Smoking prevalence ................................................................................................................. 4
Tar levels .................................................................................................................................. 4
Health warnings ........................................................................................................................ 4
Plain packaging ........................................................................................................................ 4
Advertising and sponsorship ..................................................................................................... 4
Point-of-sale display bans......................................................................................................... 5
Smoking in public places .......................................................................................................... 5
Low ignition propensity (LIP) cigarette regulation ..................................................................... 5
Flavoured tobacco product ban ................................................................................................ 5
Reduced harm .......................................................................................................................... 6
Vapour products ....................................................................................................................... 6
PRODUCTION/IMPORTS/EXPORTS .......................................................................................... 6
MARKET INDICATORS ............................................................................................................... 6
Table 1 Number of Adult Smokers by Gender 2014-2019 ........................................ 6
MARKET DATA ............................................................................................................................ 6
Table 2 Sales of Tobacco by Category: Volume 2014-2019 ..................................... 6
Table 3 Sales of Tobacco by Category: Value 2014-2019 ........................................ 7
Table 4 Sales of Tobacco by Category: % Volume Growth 2014-2019 .................... 7
Table 5 Sales of Tobacco by Category: % Value Growth 2014-2019 ....................... 7
Table 6 Forecast Sales of Tobacco by Category: Volume 2019-2024 ...................... 8
Table 7 Forecast Sales of Tobacco by Category: Value 2019-2024 ......................... 8
Table 8 Forecast Sales of Tobacco by Category: % Volume Growth 2019-
2024 ............................................................................................................. 9
Table 9 Forecast Sales of Tobacco by Category: % Value Growth 2019-2024......... 9
GLOBAL MACROECONOMIC ENVIRONMENT .......................................................................... 9
GLOBAL INDUSTRY ENVIRONMENT ...................................................................................... 10
DISCLAIMER ............................................................................................................................. 10
SOURCES.................................................................................................................................. 10
Summary 2 Research Sources ...................................................................................... 10

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TOBACCO IN PERU
EXECUTIVE SUMMARY

COVID-19 impact on tobacco

While lockdown restrictions arising from COVID-19 have had some impact on demand due to
reduced opportunities to socialise, the addictive nature of nicotine means its users are habitual
to an extent that neutralises the impact of environmental or economic crises. As a result, the
majority of tobacco consumers in Peru continue to smoke, albeit with moderated consumption
levels. Furthermore, this is to some extent offset by anxiety arising from the pandemic leading to
an increased propensity to smoke for some. Those consumers seeking to reduce expenditure
on tobacco prior to the pandemic were already shifting to purchases of illicit products in Peru,
and COVID-19 has only served to exacerbate this trend.
Meanwhile, cigars have been less affected by the pandemic, as they are purchased by more
affluent consumers, who are less impacted by adverse economic conditions than their lower-
income counterparts. At the end of the review period e-cigarettes faced the impact of
government efforts to discourage their use among young adults. While this is set to continue,
the expected rise in the number of people wishing to give up smoking completely as a result of
COVID-19 is set to counter these efforts to some degree.
Tax increases also impacted sales in 2020, with new tax regulations introduced in January.
The Ministry of Economy and Finance (MEF) raised the amounts of the Selective Consumption
Tax (ISC) applied to cigarettes. The increases ranged from PEN0.27 to PEN0.32 per unit (stick),
which implies an increase of PEN1 per box of 20 cigarettes, that is, an average 7% rise in the
price reported in 2019.

COVID-19 country impact

Lockdown in Peru began on 16 March, and was expected to last until 10 May 2020. This was
a strict lockdown, with enforcement in place and consequences for those breaching restrictions.
Restrictions on movement meant that people were only allowed to leave home to carry out
essential tasks, with a curfew in place between 20.00hrs and 05.00hrs. Driving a car was
forbidden, except by those who needed to use a vehicle to travel to work, but they would need
to obtain official permission. Homeworking was recommended for all but essential roles. The
country’s borders were also closed.
Only essential retail or service outlets remained opened, meaning mainly grocery stores,
pharmacies and banks. Even in these outlets only products considered to be of prime necessity
were being sold. Schools were closed from the start of the lockdown. On 4 May, the government
announced that some measures would be eased, for example children would be allowed out
once a day, and food deliveries would be permitted. The mining and textile industries were also
expected to resume operations.

As more consumers shift to illicit products, convenience stores gain

popularity for official sales
In 2019 the Peruvian market was characterised by cigarette consumption; other forms of
tobacco consumption were limited to certain spaces and consumer segments. Consumption of
cigars, for example, were limited to more affluent consumers. Regarding smoking tobacco, the
consumption of pipe and rolling cigarettes was negligible. This was due to the longstanding

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tradition and habits of consuming cigarettes, as well as the negative image of rolling, closely
associated with the consumption of alternative products.
Smoking prevalence in Peru continued to fall in 2019. Even though illegal consumption was
increasing, smoking prevalence was demonstrating decreasing rates. In terms of distribution,
convenience stores continued to gain popularity and sales share. Retail chain Tambo was
expected to open 500 stores in 2020. For its part, Oxxo had more than 50 outlets in Metropolitan
Lima in 2019. Meanwhile, the country’s government was become more aggressive regarding
efforts to convey the negative effects of non-fuel nicotine consumption, especially to teenagers
and people in their early 20s, many of whom smoke e-cigarettes because they believe such
products convey a “cool” and fashionable image. This remained a niche category in the overall
tobacco environment in 2019, but saw strong growth prior to COVID-19, boosted by the
launched of Myblu, the closed vaping system distributed by Tambo.

Only the young e-vapour products category has some level of

fragmentation, cigar players invest in advertising and promotion
Overall, the tobacco environment in Peru was concentrated in 2019, with both the cigarettes
and cigars and cigarillos categories dominated by a single player in each case. Only the
relatively young e-vapour products category demonstrated a greater level of fragmentation, with
just two players holding double-digit volume shares in 2019. With consumption on a downward
trend as a result of consumers’ growing health awareness, coupled with the shift to illicit
products, in the cigarettes category Philip Morris closed its factories in Colombia, and
consolidated its integration process with affiliates in Colombia, Ecuador, Peru and Venezuela in
order to create synergies. Meanwhile, BAT reassessed its distribution strategy, and moved from
direct distribution to utilising strategic partners, in an effort to increase efficiencies.
2019 saw promotional strategies implemented for cigars, and promotional activities via social
media platforms such as Facebook. Due to the spending power of cigar consumers, their
availability remained limited mainly to Lima. However, towards the end of the review period an
increasing number of purchases were being made online. While e-cigarettes were facing
government efforts to tackle consumption among young adults, in 2019 there were no
restrictions on the sale of such devices in Peru.

Increased health awareness likely post-pandemic, players to combat

illicit products’ low prices with increasingly convenient availability
The majority of tobacco users will continue to smoke in the short term, even if their
consumption levels are moderated. Additional free time, coupled with boredom and economic
anxiety, will lead to increased smoking by some consumers. However, reduced spending power
will impact demand at a time when many consumers are trading down to the cheaper alternative
of illicit products. In the post-pandemic environment, the cigarettes category will remain
constrained by those who seek to reduce expenditure on tobacco by shifting to illicit products.
The Peruvian Government’s tax hike to 7% per pack, implemented at the beginning of 2020, is
set to further increase consumer interest in illicit products. Meanwhile, cigars are expected to
see something of a rebound as lockdown restrictions ease, as cigar smoking is a particularly
social and conspicuous practise among Peru’s more affluent consumers.
Consumers will also be more conscious of health issues post-lockdown, particularly immune
health. In the medium term, the severe economic impact of COVID-19 will hit demand. Post
2008-2009’s Global Financial Crisis, the cigarettes category saw volumes decline as consumers
moved towards cessation, or purchases of cheaper products, such as economy and illicit
cigarettes. With these trends already evident in Peru in 2019, they are only likely to be
emphasised. In the long term, consumers will re-evaluate their cigarette consumption given

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dramatically changed income levels, as well as new social and health contexts. While e-vapour
products face challenges arising from government efforts to reduce their appeal to young adults
in terms of perceived “cool” image, this factor may well be offset by an increasing number of
consumers wishing to give up smoking completely, and using e-cigarettes as a mechanism to
aid doing so.
In terms of distribution, the convenience stores channel will energise tobacco categories over
the forecast period. With new outlets being opened by Tamba and Oxxo, and increased
availability through petrol stations, players will attempt to counter to lure of illicit products’ low
prices by offering official tobacco products in highly convenient locations.

OPERATING ENVIRONMENT

Legislation
In 2019, Law Project number 3833 was implemented, with the objective of establishing a
normative frame with respect to the measures of prevention and control of the consumption of
tobacco and nicotine. It also includes within its parameters the objective of regulating the
commercialisation not only of combustible tobacco, but also non-combustible, at older ages.
Finally, it included education and communication measures regarding the benefits of leading a
tobacco-free life. While this bill was withdrawn and did not prosper, it sets a relevant precedent
by placing tobacco consumption on the agenda.
The current legal framework is based on law number 29517, published in 2010, General Law
for the Prevention and Control of the Risks of Tobacco Consumption, to adapt to the World
Health Organization’s framework agreement for tobacco control.
The Peruvian government is trying to reduce consumption of legal and illegal drugs (including
tobacco) through The National Anti-Drug Strategy 2017-2021.
Anti-smoking groups in Peru mostly belong to larger institutions that are constituted to fight
against drugs, with CEDRO being the most important in the country. Other institutions cooperate
to expand the reach of programmes such as Comisión Nacional para el Desarrollo y Vida sin
Drogas (DEVIDA) and Comisión Nacional de Lucha Antitabáquica (COLAT).
COLAT is pushing to have a National Plan for Tobacco Control, as well as an Intersector
Committee on Tobacco Control with the participation of civil society.

Legislative overview

Summary 1 Legislation Summary at a Glance

A B C D E F G H I

FCTC Minimu Tar cap Verbal Graphic Advertis Retail Public Restaur
ratificati m (max pack pack ing ban point-of- smokin ant/bar
on smokin mg) health health or sale g ban public
(year) g age warning warning restricti restricti smokin
(years) on ons g ban

Yes 18 No Yes Yes Yes No Yes Yes

(2004)

Source: Euromonitor International

Notes: (B) changed from 16 in 2008; (F) media allowed if not targeted at juveniles; (H) municipal buildings only;
(I) planned for 2020

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Minimum legal smoking age

In Peru, the legal smoking age is 18 years old. This age limit is stipulated by the central
government and is not expected to increase, as it is the age at which people stop being
considered minors and have the right to vote.
Currently, 25% of the population aged between 12 and 18 years have tried tobacco at least
once. Around 800,000 Peruvian children, adolescents and young adults start smoking every
year (CEDRO, 2014).

Smoking prevalence
2019 saw a continued drop in smoking prevalence as a result of increasing taxes on the
industry.
Also, public policies established by the government during the review period have made
consumers more aware of the harmful effects of tobacco use.
In 2018, smoking prevalence among the total adult population declined from 12% to 11%.
The Ministry of Health’s (MINSA) anti-tobacco bus travels around educational institutions in
Lima. With the slogan “Tobacco, a threat to development”, the bus seeks to raise awareness
among the population about the harm that tobacco use can cause to health.

Tar levels
In Peru, there were no restrictions on tar yields in cigarettes at the end of the review period,
although it is mandatory to display brands’ tar and nicotine levels on packaging.
Limits on cigarette tar yields are not expected to be introduced.

Health warnings
There were no changes to the law on health warnings during 2018.
All cigarette packs sold in Peru must display, on both main faces, the health warning
“Tobacco smoke contains more than 4,000 toxic substances, 50 of which cause cancer. Among
them are arsenic, phosphorus, cyanide and ammonia.” The message “The sale of tobacco is
forbidden to those below the age of 18” must also be printed on both sides of the pack.
Every cigarette pack has to carry text and graphic health warnings that cover 50% of each of
the main faces of the pack. Although the text and images are not thought to have had an impact
on habitual consumers, they are a tool to reduce the number of teenagers and young adults
starting to smoke tobacco.

Plain packaging
Peru has not introduced standardised packaging for tobacco products.

Advertising and sponsorship

In 2019, Law Project number 3833 was generated, in which article 6 mentioned restrictions for
advertising and communication in packaging to minors. Although the bill was withdrawn, it set a
precedent for possible bills related to tobacco consumption, especially for vaping devices.
Advertising of tobacco through domestic television and radio is banned. Advertising through
domestic newspapers and magazines is allowed if the target audience is aged over 18, although
advertising may not be on the front or back covers.
Domestic print media, such as pamphlets, leaflets, flyers, posters and signs, is not permitted
in health facilities, public offices, or within 500m of education facilities, at sporting activities of
any type, at exhibitions and shows where entry is permitted to those aged under 18, or within

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reach of minors at places catering to the public. Outdoor advertising is not permitted within
500m of educational facilities of any level or nature, or at sporting events (indoor or outdoor).
Tobacco sponsorship of events and activities aimed at people aged under 18 is prohibited.
Tobacco companies cannot sponsor any sporting activity, and their logos or brands cannot be
promoted at sporting events.
Tobacco advertising such as brand logos on items of clothing and accessories is prohibited.
The term “accessories” is not defined by law, and it is therefore difficult to determine whether the
ban applies to all non-tobacco products. The law does not address whether services may carry
tobacco brands or logos, and is thus interpreted as permitting brand marking of services.
Promotional distribution of free tobacco-related products or toys which represent or mention
tobacco-related products to people aged under 18 years is prohibited in Peru.

Point-of-sale display bans

Advertising through points of sale is allowed. However, packages must be displayed so that
health warnings are visible.
There are no specific laws governing the advertising and display of tobacco products in
horeca outlets in Peru. However, the Ministry of Health (MINSA) occasionally calls on the
population and political forces to remember the importance of eliminating the advertising,
promotion and sponsorship of tobacco in warehouses, supermarkets and other mass outlets.
The entity believes these advertisements hinder the actions that the country is implementing to
protect the population from the health damage caused by tobacco products.

Smoking in public places

2019 saw no changes to the law regarding smoking in public places. All indoor workplaces,
indoor public places, public transport, government facilities, hospitals, residential healthcare
facilities (public areas), non-residential healthcare facilities, childcare facilities/pre-schools,
primary and secondary schools, universities/vocational facilities, shops, cultural facilities, indoor
stadiums/arenas, restaurants, bars/pubs/nightclubs, casinos, hotel/lodging (public areas), trains,
buses and other shared ground transportation (other than taxis), commercial aircraft,
commercial watercraft, public transport facilities (waiting areas for mass transit) and private
offices are 100% smoke-free. In the case of hotels/lodging guest rooms, managers can
designate some guest rooms as smoking and others as non-smoking.
Owners/managers of businesses that permit smoking on their premises can face penalties
ranging from fines of 0.5 to 1 tax unit, valued at PEN3,950 in 2016. For individuals, the penalty
is 0.5 tax unit.
The smoking ban in pubs/bars/restaurants has not stopped people from smoking. However, it
is possible that it has reduced the quantity of cigarettes consumed as smokers have to go
outside.

Low ignition propensity (LIP) cigarette regulation

Low ignition propensity (LIP) cigarette regulations are not implemented in Peru. Furthermore,
such regulations are not on the legislative agenda in the short term (2020-2021), as the
country’s government is more aggressive via tax regulation.

Flavoured tobacco product ban

There is no regulation regarding flavoured tobacco products in Peru, and there is no intention
to introduce such regulation. However, if a ban is introduced, it would negatively impact the
performance of tobacco companies, as flavour capsule cigarettes account for a substantial
share of sales.

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Reduced harm
Reduced harm tobacco regulations are not implemented in Peru. Furthermore, such
regulations are not on the legislative agenda in the short term (2020-2021), as the country’s
government is more aggressive via tax regulation.

Vapour products
MINSA press releases (2019), where this category is classified as potentially harmful in
general but for the youngest, could establish these products as a point in the legislative agenda
for coming years.
The law in Peru does not stipulate any regulations regarding electronic cigarettes, and they
are not classified as tobacco products.
It is expected that sales of vapour devices will see continued growth as the country recovers
from the COVID-19 pandemic, with second- and third-generation devices proving particularly
popular. At the end of the review period an increase in outlets selling such products was
observed in Lima and provinces across the country.

PRODUCTION/IMPORTS/EXPORTS
Hand-in-hand with the prevalence indicators, and in the context of successive tax increases,
imports are affected, with the general trend showing a decrease in cigarette imports.
Peru is not a significant producer of raw tobacco or finished cigarettes.
Cigarette imports into Peru are declining due to increasing taxes, which are having a direct
impact on the volume of cigarettes demanded. With rising prices, consumers are increasingly
shifting to illicit products.

MARKET INDICATORS
Table 1 Number of Adult Smokers by Gender 2014-2019

2014 2015 2016 2017 2018 2019

Male Number of Smokers 1,884.9 1,957.0 2,007.2 2,060.5 2,124.5 2,179.4

('000)
Female Number of 369.1 391.2 400.7 411.5 422.6 432.7
Smokers ('000)
Total Number of Smokers 2,254.1 2,348.2 2,407.9 2,472.0 2,547.1 2,612.1
('000)
Male Number of Smokers 19.5 19.7 19.6 19.4 19.3 19.3
(%)
Female Number of 3.6 3.8 3.8 3.8 3.8 3.7
Smokers (%)
Total Number of Smokers 11.4 11.6 11.5 11.5 11.4 11.4
(%)
Source: Euromonitor International from official statistics

MARKET DATA
Table 2 Sales of Tobacco by Category: Volume 2014-2019

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2014 2015 2016 2017 2018 2019

Cigarettes (million 2,392.4 2,319.0 2,245.7 1,916.5 1,834.3 1,595.1

sticks)
Cigars and Cigarillos 0.9 0.9 1.0 1.0 1.0 1.0
(million units)
Smoking Tobacco (Tonne) - - - - - -
Cigars, Cigarillos and - - - - - -
Smoking Tobacco (Not
calculable)
Smokeless Tobacco (Tonne) - - - - - -
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 3 Sales of Tobacco by Category: Value 2014-2019

PEN million
2014 2015 2016 2017 2018 2019

Cigarettes Including 851.0 882.9 1,112.0 1,034.9 1,236.3 1,075.1

Fine Cut Stick Equivalent
Fine Cut Cigarettes - - - - - -
Cigarettes 851.0 882.9 1,112.0 1,034.9 1,236.3 1,075.1
Cigars and Cigarillos 18.0 19.0 20.0 20.9 21.5 22.2
Smoking Tobacco - - - - - -
Cigars, Cigarillos and 18.0 19.0 20.0 20.9 21.5 22.2
Smoking Tobacco
Smokeless Tobacco - - - - - -
E-Vapour Products 4.9 6.1 8.0 10.6 13.3 17.0
Heated Tobacco Products - - - - - -
Smokeless Tobacco, E- 4.9 6.1 8.0 10.6 13.3 17.0
Vapour Products and
Heated Tobacco
Tobacco 873.9 907.9 1,140.1 1,066.4 1,271.1 1,114.3
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 4 Sales of Tobacco by Category: % Volume Growth 2014-2019

% volume growth
2018/19 2014-19 CAGR 2014/19 Total

Cigarettes -13.0 -7.8 -33.3

Cigars and Cigarillos -0.5 1.3 6.6
Smoking Tobacco - - -
Cigars, Cigarillos and Smoking Tobacco - - -
Smokeless Tobacco - - -
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 5 Sales of Tobacco by Category: % Value Growth 2014-2019

% current value growth

2018/19 2014-19 CAGR 2014/19 Total

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Cigarettes Including Fine Cut Stick -13.0 4.8 26.3

Equivalent
Fine Cut Cigarettes - - -
Cigarettes -13.0 4.8 26.3
Cigars and Cigarillos 3.5 4.3 23.6
Smoking Tobacco - - -
Cigars, Cigarillos and Smoking Tobacco 3.5 4.3 23.6
Smokeless Tobacco - - -
E-Vapour Products 27.4 28.4 248.4
Heated Tobacco Products - - -
Smokeless Tobacco, E-Vapour Products 27.4 28.4 248.4
and Heated Tobacco
Tobacco -12.3 5.0 27.5
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 6 Forecast Sales of Tobacco by Category: Volume 2019-2024

2019 2020 2021 2022 2023 2024

Cigarettes (million 1,595.1 1,455.0 1,376.2 1,298.5 1,222.1 1,147.1

sticks)
Cigars and Cigarillos 1.0 1.0 1.0 1.0 1.0 1.0
(million units)
Smoking Tobacco (Tonne) - - - - - -
Cigars, Cigarillos and - - - - - -
Smoking Tobacco (Not
calculable)
Smokeless Tobacco (Tonne) - - - - - -
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 7 Forecast Sales of Tobacco by Category: Value 2019-2024

PEN million
2019 2020 2021 2022 2023 2024

Cigarettes Including 1,075.1 1,051.8 995.0 938.8 883.6 829.3

Fine Cut Stick Equivalent
Fine Cut Cigarettes - - - - - -
Cigarettes 1,075.1 1,051.8 995.0 938.8 883.6 829.3
Cigars and Cigarillos 22.2 22.5 22.8 23.1 23.4 22.8
Smoking Tobacco - - - - - -
Cigars, Cigarillos and 22.2 22.5 22.8 23.1 23.4 22.8
Smoking Tobacco
Smokeless Tobacco - - - - - -
E-Vapour Products 17.0 17.0 18.2 19.0 20.2 21.5
Heated Tobacco Products - - - - - -
Smokeless Tobacco, E- 17.0 17.0 18.2 19.0 20.2 21.5
Vapour Products and
Heated Tobacco
Tobacco 1,114.3 1,091.3 1,035.9 980.9 927.1 873.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

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Table 8 Forecast Sales of Tobacco by Category: % Volume Growth 2019-2024

% volume growth
2019/20 2019-24 CAGR 2019/24 Total

Cigarettes -8.8 -6.4 -28.1

Cigars and Cigarillos -0.1 -0.1 -0.5
Smoking Tobacco - - -
Cigars, Cigarillos and Smoking Tobacco - - -
Smokeless Tobacco - - -
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 9 Forecast Sales of Tobacco by Category: % Value Growth 2019-2024

% constant value growth

2019/2020 2019-24 CAGR 2019/24 Total

Cigarettes Including Fine Cut Stick -2.2 -5.1 -22.9

Equivalent
Fine Cut Cigarettes - - -
Cigarettes -2.2 -5.1 -22.9
Cigars and Cigarillos 1.3 0.5 2.4
Smoking Tobacco - - -
Cigars, Cigarillos and Smoking Tobacco 1.3 0.5 2.4
Smokeless Tobacco - - -
E-Vapour Products 0.0 4.8 26.6
Heated Tobacco Products - - -
Smokeless Tobacco, E-Vapour Products 0.0 4.8 26.6
and Heated Tobacco
Tobacco -2.1 -4.8 -21.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

GLOBAL MACROECONOMIC ENVIRONMENT

▪ The COVID-19 pandemic has forced governments to quarantine entire countries, disrupted
global supply chains, slashed business and consumer confidence and affected financial
markets. The effects on the global economy are already being felt, and will be substantial, but
the exact magnitude will depend on the length of COVID-19 restrictions.
▪ COVID-19 will severely impact both the supply and demand sides of the economy. At the
same time, monetary policy tools are almost exhausted due to the slow recovery from the
Global Financial Crisis. Interest rates have not recovered, so central banks have to resort to
Quantitative Easing programmes (QEs), but QEs have a limited effect on labour markets,
consumer spending, and other aspects of the real economy.
▪ Thus, countries have to turn to fiscal stimulus. However, the response to fiscal stimulus will
also be limited as long as people are quarantined in their homes. In the meantime,
governments are helping businesses and citizens by providing emergency loans to cover
expenses and lower the spill-over effects through economies, but uncertainty surrounding the
pandemic limits economic activity.

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GLOBAL INDUSTRY ENVIRONMENT

▪ Over the last decade, the global tobacco industry has been in a state of putative, unrealised
transformation as the previous dominance of a single nicotine delivery mechanism, the
cigarette, has begun to wane, and a range of alternatives have become increasingly viable to
the adult consumer. International tobacco companies have invested more resources in
developing cigarette alternatives, just as they have found it increasingly difficult in some
developed markets to expand revenue in the face of declining cigarette volumes,
commoditised by regulation, taxation and health awareness.
▪ In the short term, the fallout from COVID-19 is likely to suspend these trends. Generally
speaking, global consumers are maintaining access to cigarettes, and a combination of
stockpiling, increased private time and anxiety will result in short-term spikes in demand.
Conversely, many global smokers may find alternatives relatively more difficult to access, and
pause plans to migrate in a wider context of uncertainty.
▪ Over the mid- to long-term, however, the crisis will accelerate the underlying existential
challenges facing the industry as consumers reassess the nature and extent of their tobacco
and nicotine use in the context of evolving (physical and mental) health priorities, and
constrained disposable income levels. Governments will increase taxation on tobacco to pay
for the crisis, and may leverage it to further extend controls on tobacco.
▪ To better understand the impact of COVID-19 on the industry, and what the crisis could mean
for near- and mid-term forecasts, please read the report, The Impact of Coronavirus on
Tobacco (April 2020), which serves as an early guide to forecasting the crisis, with insights on
current results, lessons from impacted areas, and scenarios for understanding the virus’
future impact.

DISCLAIMER
Forecast and scenario closing date: 25 May 2020
Report closing date: 29 July 2020
Analysis and data in this report give full consideration to the impact of COVID-19 on
consumer behaviour and market performance in 2020 and beyond. However, the situation
continues to develop rapidly, and the influence and severity of the pandemic are constantly
evolving. For the very latest insight on COVID-19 and its impact on industries and consumers at
both global and national levels, readers can access strategic analysis and updates on
www.euromonitor.com and via the Passport system, where new content is being added on a
systematic basis.

SOURCES
Sources used during research include the following:

Summary 2 Research Sources

Official Sources Congreso de La Republica

El Peruano

Instituto Nacional de Defensa de la Propiedad

Intelectual (INDECOPI)

Instituto Nacional de Estadística e Informática

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Ministerio de Salud

SUNAT

Superintendencia del Mercado de Valores

United States Department of Agriculture

(USDA) Foreign Agricultural Service (FAS)

Trade Associations Sociedad Nacional de Industrias

Trade Press Altavoz

Andina - Agencia Peruana de Noticias

Capital

Diario Correo

El Comercio

Expreso

Gestión

La República

Peru 21

poder.pe

Radio Programas del Perú

Tobacco Journal International

Source: Euromonitor International

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