Newly released market study: Cigarettes in Nigeria

From: Fast Market Research, Inc.
Published: Mon Sep 21 2015

In 2014 cigarettes grew at a slower pace than over the review period, with a negligible increase in retail volume terms, compared with a CAGR of 1% over the review period. This was largely due to the sudden strong growth in illicit trade cigarettes, which began in 2012. New illicit brands are a recent phenomenon, as they appear to be imported legally, but simply lack other legal requirements, such as the approval of the Standards Organisation of Nigeria. The brands have full legal warnings, the name of the manufacturer, tar level and other legal requirements, but are sometimes found to have reached their expiry date. These brands are led by the very popular Esse brand, which is widely available in retail channels such as kiosks and tobacco specialists. This innovative cigarette brand – being a slim and low/ultra low tar cigarette – has taken share from legal cigarettes to reach a 5% share of cigarettes in just its two year presence. It is quite predominant nationally, from the north to the south, and is even present in smaller cities. It is very cheap, and its novelty appeals to smokers. Another similar brand imported since 2014 is Business Club, a fruit-flavoured super slim cigarette. Even globally established brands such as Marlboro have been sold for a long time in Nigeria in standard retail channels such as independent small grocers and bars, despite being imported illegally.

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Competitive Landscape

Cigarettes in Nigeria is essentially a near monopoly, with British American Tobacco (Nigeria) (BATN) dominating with an 80% share of volume sales in 2014. The company has dominated the local Nigerian market since 2003, when it built its new factory and took control of over a 70% share of sales of cigarettes in the country. BATN’s dominance stems from the popularity of its brands as a result of its long-standing presence in Nigeria. Having made good progress in reducing illegal imports of cigarettes, which made up 80% of sales of cigarettes at one time, BATN is expected to continue to build on its dominant position in the Nigerian market through the aggressive promotion of its brands.

Industry Prospects

With increased urbanisation and westernisation and an increasing population, demand for cigarettes is likely to remain stable, with a negligible retail volume CAGR expected over the forecast period. This is weaker than the volume CAGR of 1% recorded over the review period, largely due to the rise in illicit trade.

Report Overview

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

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