This decline is mainly caused by the sharp increase in prices, which took place in early January 2019, in connection with the increase in the internal consumption tax (TIC) on cigarettes as part of the 2019 Finance Act, according to tobacco operators.
Effectively, the price increase was on average 6% per packet for the premium. Thus, in a market where 40% of volumes are sold at retail, the price of the stem has increased by 25% (MAD 2.5 per unit against MAD 2 before the price increase).
This is the first time that an increase in tobacco selling prices has led to a reduction in cigarette consumption in Morocco. There had been increases in 2013 and 2015, but they did not have the same effect.
But beyond the decrease in consumption, this also translates into two other major elements.
According to the operators, the decline in sales of internal products (-9%) was recovered by the illicit market (smuggling), which increased by more than 28%. The latest figures from the survey conducted by the Customs and Indirect Tax Administration (ADII) show a contraband cigarette penetration rate of 5.23% in 2019, compared to 3.73% in 2018.
Moreover, although there are no statistics on this subject, the conversion of smokers to alternative products, mainly electronic cigarettes, is becoming increasingly tangible on the Moroccan market. This pace will accelerate further in the coming years, following the regulation of this segment.
Overall, alternative products contribute to the reduction of the smoking prevalence ratio. Japan is the best example of this. Indeed, according to a study conducted in June 2019 by Tobacco Atlas, the conventional cigarette market in Japan fell from 89 billion in January 2016 to 64 billion as of August 1, 2018, a decrease of 30%, following the rise of alternative products.
It’s really a cool and useful piece of info. I’m happy that you shared this helpful info with us. Please stay us informed like this. Thank you for sharing.