Fifty percent of men of legal smoking age in Jordan smoke.
With an overall population of more than 330 million people, West Asia (or the Middle East) – with 21 countries including Iran, Turkey, Iraq, Saudi Arabia, and Jordan fully or partly located in the region – sees growing consumption and progress achieved by regional authorities in combatting illicit tobacco trade.
According to Euromonitor International, consumers in West Asia smoked, on average, about 800 cigarette sticks per person in 2020, including Turkey – though in other countries this is much higher, such as in Lebanon (1,500) and Iraq (1,400).
“Overall, there was retail growth in tobacco [mainly cigarettes] in some countries of the region and a decline in others due to the Covid-19 environment, with less disposable income and lockdowns hampering sales, such as in Turkey and Saudi Arabia, which are doing more to deter smoking,” said Jacob Adib, a Euromonitor International analyst. “Equally, many consumers switched from premium or high-end brands to more economical ones, having less money to spend. This has also helped the rise of illicit trade in some markets.”
According to Adib, some countries did see growth in 2020, such as Jordan, Iraq, and Qatar, due to younger consumers taking up cigarettes during long periods of lockdown and isolation. Moreover, in Jordan, smoking prevalence amongst males is 50% of the legal smoking population, which has acted as a cushion against the pandemic.
A combination of measures
Despite the pandemic and its negative economic consequences, some transnational tobacco companies increased their market share in West Asia countries in recent years, with some even considering further expansion in the coming years. The top four cigarette players in West Asia area are Philip Morris International (PMI), British American Tobacco (BAT), Eastern Company SAE, and Japan Tobacco International (JTI). Some of these companies may have experienced decreasing market share, but some, such as Eastern Company, grew. JTI has also been able to significantly expand its presence in the West Asia market in recent years, especially in Jordan, where it is currently the market leader with a 55% market share. Raaed Alkharabsheh, JTI spokesperson, told Tobacco Asia,
“The growth of our business in the West Asia region became the result of multiple factors, such as implementation of a corporate strategy of development customized to local markets and consumer’s needs and introduction of measures and contributions to eliminate illegal trade in this region.”
According to Alkharabsheh, successful implementation of these measures led to a historical decline in illegal trade in the region and, as a result, an increase in legitimate product consumption, providing additional opportunities for growth to manufacturers.
But “when looking at the current situation, we cannot directly link increase in market rates and tobacco consumption. The different circumstances that affected the region have and are still contributing to growth rates. For example, in Jordan, the legitimate market grew due to the decline in illegal trade during Covid-19 and the growth rate increased.” he pointed out.
Growth for growers
The growth potential is not limited to manufacturers. Even tobacco growers can enjoy a positive outlook. Ivan Genov, International Tobacco Growers’ Association (ITGA) expert, said, “West Asia is one of the very few regions in the world where pockets of expected consumption growth still exist. A few examples of these markets include Jordan, Iraq, and Saudi Arabia, which could be considered as the most promising for further growth.”
“In terms of the regional demand for tobacco leaf, 2020 was a year when global supply and demand was more or less in balance. However, with the historic secular downward trend in demand and the expected rebound of supply that is mainly triggered by the US, Brazil, and Zimbabwe, the equation will shift in 2021. One factor that distinguishes the region, and countries like Turkey in particular, is the popularity of oriental tobacco, a smaller tobacco type by production size on the global market, but one that is used in heated tobacco. These emerging products are becoming increasingly popular which could provide opportunities for growers in the years to come.”
Cautious optimism moving forward
However, while the potential is there, growth in consumer consumption in West Asia is not expected to remain as strong as it had been historically, as many consumers are becoming more health-conscious, particularly with the impact of Covid-19. According to analysts, cigarette smoking is on the decline in the region, though compared to other regions, such as in Western Europe, it is declining at a slower rate.
Nevertheless, there is still a strong smoking prevalence in the region with an average of about 40% of the population of legal smoking age smokers. This number is predominantly men, though female smokers have been on the rise as it becomes less of a stigma. The region holds promise, particularly due to the relatively young population. However, pricing will remain a strong issue to drive further sales.