Tobacco in Egypt

Report Summary

Discover the latest market trends and uncover sources of future market growth for the Tobacco industry in Egypt with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Tobacco industry in Egypt, our research will save you time and money while empowering you to make informed, profitable decisions.

The Tobacco in Egypt market research report includes:

• Analysis of key supply-side and demand trends
• Detailed segmentation of international and local products
• Historic volumes and values, company and brand market shares
• Five year forecasts of market trends and market growth
• Production, imports by origin, exports by destination
• Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

• What is the market size of Tobacco in Egypt?
• What are the major brands in Egypt?
• Which sector of the tobacco products market is the largest by value sales in Egypt?
• Which sector of the tobacco products market has been growing the fastest, by volume and value, in Egypt?
• Which sector is the most heavily taxed in Egypt?
• Which companies dominate in the total tobacco market in Egypt in terms of market share?
• What is the distribution channel split for the tobacco products market in Egypt?

Why buy this report?

• Gain competitive intelligence about market leaders
• Track key industry trends, opportunities and threats
• Inform your marketing, brand, strategy and market development, sales and supply functions

EXECUTIVE SUMMARY

Strong volume growth for review period thanks to economic growth

There was strong volume growth across tobacco products during the review period as a whole, with this linked to good economic growth for the country. Disposable income levels rose for many households during the review period, while the country’s mid-income group continued to expand. This resulted in consumers being able to afford to smoke more. With health awareness remaining low at the end of the review period, many Egyptians consequently increased their consumption of cigarettes.

Anti-smoking legislation has little impact on volume growth

The government introduced numerous anti-smoking measures during the review period, including an extended public smoking ban, a ban on sales to minors and a ban on advertising, promotion and sponsorship in 2007. This was followed by the compulsory introduction of graphic warning images on cigarette packs in 2008 and huge tax increases across tobacco products in 2010. Despite this legislation, however, tobacco products continued to see volume growth at the end of the review period. This was partly due to poor enforcement of anti-smoking legislation, with sales to minors and public smoking remaining rife at the end of the review period. In addition, smoking is regarded as a traditional part of Egyptian culture by many, with many viewing cigarettes as necessities and having little awareness of these products’ health risks. Consequently, following tax hikes many economised elsewhere rather than relinquishing their cigarettes.

State-owned Eastern Company continues to dominate sales

The government’s reticence in enforcing the smoking ban during the review period was traced by some industry observers to its majority stake in dominant tobacco products player Eastern Company. This company dominates cigarettes, cigars and smoking tobacco and was the only producer of tobacco products in Egypt during the review period. The company is also a major contributor to the government’s revenues. The company offers a wide range, including its own brands and those of multinationals. Its portfolio spans all significant product areas, tar levels and price bands. The company’s leading economy brand Cleopatra meanwhile enjoys strong customer loyalty and alone accounted for a strong dominant share in cigarettes and thus overall tobacco products in 2010.

Differing distribution channels lead cigarettes, cigars and smoking tobacco

Newsagent-tobacconists/kiosks is the most significant distribution channel for cigarettes in Egypt, with this channel benefiting from its widespread presence, convenience and wide range of products. Street vendors and independent small grocers are also important distribution channels for cigarettes. Cigars meanwhile target high-income consumers, with this consumer group mainly targeted via forecourt retailers. Smoking tobacco in contrast sees its strongest sales via supermarkets/hypermarkets, which stock a wide range of brands and flavours and also attract consumers by offering lower prices.

Future growth likely to be shaped by political developments

Following Egypt’s revolution in January 2011, the country’s political future remained uncertain at the end of the year. Given the government’s majority stake in Eastern Company, which in turn accounted for a strong dominant share in tobacco products, the future direction of the industry also remains uncertain in many respects. Once Egypt has a stable government in place, its strategies will determine the future of Eastern Company and thus overall tobacco products. Tobacco products is however likely to see good volume growth during the forecast period, with rising income levels being expected for the majority low-income group in the country. These consumers are thus likely to increase their tobacco consumption during the forecast period.

Table of Contents

Tobacco in Egypt - Industry Overview

EXECUTIVE SUMMARY
Strong volume growth for review period thanks to economic growth
Anti-smoking legislation has little impact on volume growth
State-owned Eastern Company continues to dominate sales
Differing distribution channels lead cigarettes, cigars and smoking tobacco
Future growth likely to be shaped by political developments

OPERATING ENVIRONMENT
Legislative overview/ FCTC ratification
Summary 1 Legislation Summary at a Glance
Legislation: Egyptian law
Minimum legal smoking age
Smoking prevalence
Table 1 Smoking Prevalence in Adult Population 2005-2010
Table 2 Number of Smokers by Gender 2005-2010
Tar levels
Health warnings
Advertising and sponsorship
Point-of-sale display bans
Smoking in public places
Low Ignition Propensity (LIP) regulation
Electronic cigarettes
Litigation
Death by cause
Table 3 Death by Cause 2005-2010

TAXATION AND PRICING
Duty paid packet marks
Taxation rates
Table 4 Taxation and Duty Levies 2010
Average cigarette pack price breakdown
Table 5 Average Cigarette Pack Price Breakdown: Brand Examples 2010

PRODUCTION/IMPORTS/EXPORTS
Table 6 Production/Imports/Exports 2005-2010
Table 7 Trade Statistics – Tobacco Leaf 2006-2010
Illicit trade in cigarettes

MARKET INDICATORS
Table 8 Illicit Trade Estimate of Cigarettes by Volume 2005-2010

MARKET DATA
Table 9 Sales of Tobacco by Category: Volume 2005-2010
Table 10 Sales of Tobacco by Category: Value 2005-2010
Table 11 Sales of Tobacco by Category: % Volume Growth 2005-2010
Table 12 Sales of Tobacco by Category: % Value Growth 2005-2010
Table 13 Forecast Sales of Tobacco by Category: Volume 2010-2015
Table 14 Forecast Sales of Tobacco by Category: Value 2010-2015
Table 15 Forecast Sales of Tobacco by Category: % Volume Growth 2010-2015
Table 16 Forecast Sales of Tobacco by Category: % Value Growth 2010-2015

DEFINITIONS
Summary 2 Research Sources

Tobacco in Egypt - Company Profiles

Eastern Company SAE in Tobacco (Egypt)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 5 Eastern Company SAE: Competitive Position 2010

Nakhla Tobacco Co in Tobacco (Egypt)
STRATEGIC DIRECTION
KEY FACTS
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 7 Nakhla Tobacco Co: Competitive Position 2010

Cigarettes in Egypt - Category Analysis

HEADLINES

TRENDS
The government restructured its tobacco products taxation in 2010, with this resulting in the introduction of 40% ad valorem tax based on retail price and a further E£1.25 tax per pack for cigarettes. This replaced a confusing seven-tier system, which imposed tax rates of around 24-28%, and thus resulted in a marked increase in per-pack price in the year. The government also gained the right to further increase the price of cigarettes and other tobacco products. The government also announced that entire cities would see the enforcement of a smoking ban in public places. This raft of legislation followed on from the introduction of a more comprehensive smoking ban and a ban on sales of cigarettes to those aged below 18-years-old in 2007. 2007 also saw the government ban the promotion, advertising and sponsorship of cigarettes. Meanwhile, compulsory anti-smoking graphic images were introduced on cigarette packs in 2008.

COMPETITIVE LANDSCAPE
Tobacco in Egypt is currently monopolised by Eastern Company, a state-controlled company in which the government holds a majority stake. A privatisation programme for Eastern Company was initiated in 1997. However, this process has not yet been completed and the Egyptian government thus still holds a majority stake. Eastern Company accounted for 98% volume share in cigarette sales in NBO terms in 2010. The company accounted for 98% share in high tar cigarettes in the year, 99% in low tar and ultra low tar cigarettes and close to 100% share in mid tar cigarettes.

NEW PRODUCT DEVELOPMENTS
Summary 8 Cigarettes - New Product Launches

DISTRIBUTION

PROSPECTS
The January 2011 revolution is expected to have both positive and negative implications for cigarettes during the forecast period. In the short-term, the revolution impacted imports of cigarettes, with fewer imports thus being available. In addition, Eastern Company’s struggled to maintain production as a result of curfews and unrest, while distribution networks were also impacted, with supplies thus running short for many retailers in the first quarter of 2011.

SECTOR BACKGROUND
Cigarettes: price bands
Summary 9 Cigarette Price Band Definitions
Cigarettes: menthol/standard
Cigarettes: filter/non-filter
Cigarettes: carbon/standard filter
Cigarettes: filter length
Cigarettes: slims/superslims vs regular
Cigarettes: pack size
Cigarettes: pack type

CATEGORY DATA
Table 17 Sales of Cigarettes by Tar Level: Volume 2005-2010
Table 18 Sales of Cigarettes by Tar Level: Value 2005-2010
Table 19 Sales of Cigarettes by Tar Level: % Volume Growth 2005-2010
Table 20 Sales of Cigarettes by Tar Level: % Value Growth 2005-2010
Table 21 Sales of Cigarettes by Price Band: % Volume Breakdown 2005-2010
Table 22 Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2005-2010
Table 23 Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2005-2010
Table 24 Sales of Cigarettes by Filter Vs Non-filter: % Volume Breakdown 2005-2010
Table 25 Sales of Filter Cigarettes by Carbon Vs Non-carbon: % Volume Breakdown 2005-2010
Table 26 Sales of Cigarettes by Length: % Volume Breakdown 2005-2010
Table 27 Sales of Cigarettes by Regular/Slim: % Volume Breakdown 2006-2010
Table 28 Sales of Cigarettes by Pack Size: % Volume Breakdown 2005-2010
Table 29 Sales of Cigarettes by Pack Type: % Volume Breakdown 2005-2010
Table 30 Cigarettes Company Shares 2006-2010
Table 31 Cigarettes Brand Shares 2007-2010
Table 32 Sales of Cigarettes by Distribution Format: % Analysis 2005-2010
Table 33 Cigarettes: Production, Imports and Exports: Total Volume 2005-2010
Table 34 Forecast Sales of Cigarettes by Tar Level: Volume 2010-2015
Table 35 Forecast Sales of Cigarettes by Tar Level: Value 2010-2015
Table 36 Forecast Sales of Cigarettes by Tar Level: % Volume Growth 2010-2015
Table 37 Forecast Sales of Cigarettes by Tar Level: % Value Growth 2010-2015
Table 38 Forecast Sales of Cigarettes by Price Band: % Volume Breakdown 2010-2015
Table 39 Forecast Sales of Cigarettes by Standard/Menthol: % Volume Breakdown 2010-2015
Table 40 Forecast Sales of Cigarettes by Tobacco Type: % Volume Breakdown 2010-2015
Table 41 Forecast Sales of Cigarettes by Filter Vs Non-filter: % Volume Breakdown 2010-2015
Table 42 Forecast Sales of Filter Cigarettes by Carbon Vs Non-carbon: % Volume Breakdown 2010-2015
Table 43 Forecast Sales of Cigarettes by Length: % Volume Breakdown 2010-2015
Table 44 Forecast Sales of Cigarettes by Regular/Slim: % Volume Breakdown 2010-2015
Table 45 Forecast Sales of Cigarettes by Pack Size: % Volume Breakdown 2010-2015
Table 46 Forecast Sales of Cigarettes by Pack Type: % Volume Breakdown 2010-2015

Cigars in Egypt - Category Analysis

HEADLINES

TRENDS
From mid-2010, higher taxes were levied on cigars in Egypt, with this resulting in a marked increase in unit price. However, this increase did not dramatically affect growth in volume sales as cigars are purchased mainly by affluent consumers. Sales are almost exclusively limited to high-income men, who are thus fairly unconcerned about unit price rises.

HAND-MADE VERSUS MACHINE MANUFACTURED SPLITS
Table 47 Sales of Cigars by Handmade vs Machine-manufactured 2006-2010

COMPETITIVE LANDSCAPE
Eastern Company remained the dominant player in cigars in Egypt during 2010, with a share of 58% in retail volume terms. The company has the widest distribution in cigars and also offers lower prices thanks to its use of domestic production facilities. The company’s two main brands are José Bartolo, which accounted for 21% retail volume share in 2010, and Verona at 27% share.

NEW PRODUCT DEVELOPMENTS
Summary 10 Cigars and Cigarillos - New Product Launches

DISTRIBUTION

PROSPECTS
Egypt’s future remained uncertain at the end of 2011, following the January 2011 revolution. A military junta ruled the country for the majority of the year, with presidential elections being scheduled for April 2012. There are signs of Islamist parties gaining power, which could prove problematic for tobacco products in general, as smoking is considered to be haraam.

CATEGORY DATA
Table 48 Sales of Cigars by Category: Volume 2005-2010
Table 49 Sales of Cigars by Category: Value 2005-2010
Table 50 Sales of Cigars by Category: % Volume Growth 2005-2010
Table 51 Sales of Cigars by Category: % Value Growth 2005-2010
Table 52 Sales of Cigars by Handmade vs Machine Manufactured: % Volume Breakdown 2005-2010
Table 53 Company Shares of Cigars Excluding Cigarillos 2006-2010
Table 54 Brand Shares of Cigars Excluding Cigarillos 2007-2010
Table 55 Sales of Cigars by Distribution Format: % Analysis 2005-2010
Table 56 Forecast Sales of Cigars by Category: Volume 2010-2015
Table 57 Forecast Sales of Cigars by Category: Value 2010-2015
Table 58 Forecast Sales of Cigars by Category: % Volume Growth 2010-2015
Table 59 Forecast Sales of Cigars by Category: % Value Growth 2010-2015

Smokeless Tobacco in Egypt - Category Analysis

TRENDS
Sales of smokeless tobacco remained negligible in Egypt during the review period. Egyptians have no familiarity with smokeless tobacco and players are reluctant to launch such products due to consumers’ traditional preferences when it comes to buying tobacco products. These products are thus unlikely to be introduced during the forecast period.

Smoking Tobacco in Egypt - Category Analysis

HEADLINES

TRENDS
There was a sharp rise in current value sales in 2010 over the previous year, with this linked to the introduction of considerably higher prices. The government imposed a 100% ad valorem tax for loose tobacco. This was considerably higher in comparison to the 40% ad valorem tax imposed on cigarettes and cigars, with the government recognising that low prices contribute the widespread popularity of shisha smoking.

The Role and Effect of Cannabis/Marijuana

DISTRIBUTION

COMPETITIVE LANDSCAPE
Eastern Company continued to dominate smoking tobacco in Egypt in 2010 with 67% retail volume share. Benefiting from majority ownership by the Egyptian government, Eastern Company has dominate tobacco sales in Egypt for a long time and represents significant revenues for the government in the form of profits. The close ties between Eastern Company and the government make it extremely difficult for other tobacco companies to compete.

NEW PRODUCT DEVELOPMENTS

PROSPECTS
In the aftermath of the January 2011 revolution, the country remained in turmoil for the remainder of the year. Consequently, smoking bans were neglected, as Egypt sought to regain political stability and to address issues such as income disparity and corruption. Alexandria’s ban on smoking shisha in public areas was thus relaxed, with the proposed bans for other cities now viewed as unlikely to be introduced.

CATEGORY DATA
Table 60 Sales of Smoking Tobacco by Category: Volume 2005-2010
Table 61 Sales of Smoking Tobacco by Category: Value 2005-2010
Table 62 Sales of Smoking Tobacco by Category: % Volume Growth 2005-2010
Table 63 Sales of Smoking Tobacco by Category: % Value Growth 2005-2010
Table 64 Company Shares of RYO Tobacco 2006-2010
Table 65 Brand Shares of RYO Tobacco 2007-2010
Table 66 Company Shares of Pipe Tobacco 2006-2010
Table 67 Brand Shares of Pipe Tobacco 2007-2010
Table 68 Sales of Smoking Tobacco by Distribution Format: % Analysis 2005-2010
Table 69 Forecast Sales of Smoking Tobacco by Category: Volume 2010-2015
Table 70 Forecast Sales of Smoking Tobacco by Category: Value 2010-2015
Table 71 Forecast Sales of Smoking Tobacco by Category: % Volume Growth 2010-2015
Table 72 Forecast Sales of Smoking Tobacco by Category: % Value Growth 2010-2015