Tobacco 2021: sales of cigarettes rise for first time in seven years

The past year has been one of both highs and lows for the tobacco market, as the pandemic impacted on illicit trade and legal cross-border trade.

In essence, illicit trade collapsed in the wake of the initial Covid lockdown in spring 2020. It was the same story for legal imports as international travel ground to a halt.

This slowed the decline in volume sales of cigarettes last year. But this year, they grew by 0.5% – marking the first time units have been in the black for at least seven years.

These dynamics all changed in the latter half of the year, as borders reopened and the foreign holiday market picked up. Volumes have been declining every month since May as a result.

Still, it’s a fairly safe bet that if the Omicron variant puts the brakes on overseas travel for a significant length of time, growth may well come back into the market.

At a brand level, downtrading remained the prevailing consumer trend in ciggies. As duty increases keep forcing up the price of tobacco – average pack prices rose 3.5% this year – smokers are seeking value for money.

Market leader Benson & Hedges from JTI and Imperial Brands’ third-ranked Lambert & Butler were the fastest-growing cigarette brands – driven by sales of their respective Blue variants, which are positioned in the lowest pricing tier.

The brands also benefited as smokers of menthol and flavoured tobacco brands migrated to them following the ban on such products in May 2020.

On the flip side, brands that once relied heavily on their menthol versions saw a big hit to their sales. Take Sterling and JPS, which sold 23.4 million fewer packs between them.

Marlboro bucked the prevailing trends in the market. Although it once offered a menthol variant and is also a premium brand, it has grown units by 1.6% – adding an extra £47.8m. That’s despite owner Philip Morris continuing to focus most of its efforts on heat-not-burn tobacco product Iqos.

Meanwhile, rolling tobacco has reaped even greater rewards from downtrading  and the collapse of illicit trade. Volumes are up  13.5%, with all top 10 brands in double-digit value growth – by as much as 99.6%.