The tobacco market - Brazil

1.1 Definition and scope of study

The tobacco market is a very specific market, highly regulated and monitored, yet it affects all segments of the world and Brazilian population. The scope of this study will include the production, distribution and sale of tobacco and its by-products, such as cigarettes, cigars, cigarillos, roll-your-own tobacco, chewing tobacco and snuff. It will also discuss new forms of consumption that have emerged on the market, such as electronic cigarettes.

The tobacco market is dominated by a few leaders such as Philip Morris International (owner of the Malboro and Philip Morris brands), Seita (owner of Fortuna, Gauloises and Gitanes), Altadis Imperial Tobacco, Japan Tobacco International and British American Tobacco. There are also several tobacco growers in Brazil, the main one being Souza Cruz. Finally, the retail sale of tobacco products is regulated by the customs administration.

The cigarette industry produces around 5.4 trillion units a year worldwide. Brazil is the largest consumer market for the product in Latin America, with consumption corresponding to 42% of the total sold on the continent. Despite the importance of tobacco growing for the Brazilian economy, its tobacco plantations occupy less than 1% of the country's total planted area. Tobacco growing is highly concentrated in the Northeast (Bahia and Alagoas) and the South (Rio Grande do Sul, Santa Catarina and Paraná). It is an extremely profitable activity, especially in comparison with other crops. To correspond to the gross yield per hectare of tobacco would require 6.5 hectares of corn or 9.6 hectares of beans, for example. The Brazilian tobacco market is concentrated in two major companies: Souza Cruz (with 62% market share) and Philip Morris (with 15%). Other major players in the Brazilian tobacco industry are Menendez Amerino, Associated Tobacco Company Brazil and Continental Tobacco Alliance.