Cigarettes and Alternative Nicotine Products in Middle East and Africa

August 2024

Tobacco industry in the Middle East and Africa is growing in both cigarettes and alternative tobacco products, with Egypt, Saudi Arabia and South Africa to offer the largest opportunity. Cigarettes are demonstrating moderate growth depending on smoking tradition in the country and import processes. E-vapour products and heated tobacco are growing fast from smaller base, and their future in the region depends on further regulations and innovative products yet to be offered by manufacturers.

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Key Findings

The region offers large opportunities for cigarettes and tobacco alternatives

Given strong smoking tradition in many countries in the region, combined with the expected fast population growth, the tobacco industry in the Middle East and Africa has not reached its potential yet. Some markets have high smoking prevalence and traditional lifestyles, allowing enough space for cigarettes. In other markets, higher purchasing power and health awareness make them more attractive for manufacturers of e-vapour products and heated tobacco.

Low purchasing power and import issues pose challenges for tobacco in some markets

Despite high demand for tobacco products, in some markets consumers struggle financially due to historically low purchasing power or ongoing inflation. That pushes them to opt for cheaper brands, or smoke less, or stick to cigarettes without trying high-in-price alternatives. In addition, geopolitical turbulence causes disruption in tobacco imports to the region, which is impacting volumes and creates a shift to the brands that have stock.

Illicit trade is yet to be fought by new regulations

Illicit trade poses a threat to tobacco products distributed legally. This is especially visible within the e-vapour products space. In many markets, illicit products have a different brand landscape, channel distribution, nicotine strength and flavours. Most markets in the Middle East and Africa are still in the process of issuing further regulations to combat illicit trade.

New products will shape the landscape for e-vapour products and heated tobacco

E-vapour products and heated tobacco are benefitting from novelty, and more variety is yet to be introduced. While closed system vapes manufacturers are winning consumers by enhancing convenience, open system vapes are offering indulgence with more flavours. Heated tobacco is rapidly taking a large share of smokers in the region, however, even more consumers might get into this category once more companies join this space along with Philip Morris.

Scope
Key findings
Middle East and Africa has further potential in cigarettes
Alternatives to cigarettes to offer more opportunities with wider distribution
2024 is expected to start an acceleration in cigarettes growth after resolving import issues
After growing rapidly from a small base, vapes and heated tobacco will stabilise at 15% growth
Countries with strong smoking cultures require stable imports to maintain cigarette volumes
The landscape of alternative tobacco products is shaped by local regulations
Shift to e-vapour products and illicit trade pose a threat to cigarettes volume
E-vapour products in the Middle East and Africa are benefiting from flexible regulations
Diverse products and strong distribution contribute to cigarettes’ success in the region
The pandemic and new regulations slowed down cigarettes’ growth in certain markets
E-vapour products are benefiting from their variety and consumers shifting from cigarettes
Changing regulations impact the growth of e-vapour products and heated tobacco
Channels dominated by illicit cigarettes offer limited opportunities for legal cigarette
Traditional channels dominates the scene while few countries venture into new channels
E-vapour products specialist stores are sprouting across the region
E-commerce comes into focus as a channel for great potential growth for alternative tobacco
Cigarettes market in each country is dominated by a few companies, mostly international
An Egyptian company Eastern Co is successfully playing along with four global giants
Most of top companies found their niche in few markets with the right offering
Cleopatra by Eastern Co is holding top position while international brands are more volatile
Philip Morris is leading heated tobacco while BAT is dominating within e-vapour products
Egypt will continue to grow in cigarettes due to strong smoking tradition
High-tar cigarettes in Algeria and premium cigarettes in the UAE will be on demand
Saudi Arabia will continue witnessing active shift from cigarettes to alternatives
Egypt and South Africa are set to grow in tobacco alternatives, if future regulations allow it
Algeria: Market Context
Algeria: Competitive and Retail Landscape
Egypt: Market Context
Egypt: Competitive and Retail Landscape
Israel: Market Context
Israel: Competitive and Retail Landscape
Morocco: Market Context
Morocco: Competitive and Retail Landscape
Nigeria: Market Context
Nigeria: Competitive and Retail Landscape
Saudi Arabia: Market Context
Saudi Arabia: Competitive and Retail Landscape
South Africa: Market Context
South Africa: Competitive and Retail Landscape
Tunisia: Market Context
Tunisia: Competitive and Retail Landscape
United Arab Emirates: Market Context
United Arab Emirates: Competitive and Retail Landscape

Tobacco

Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.

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