The tobacco industry in Pakistan continued to be a significant contributor to the national economy in 2024, though it faces a complex landscape shaped by evolving regulations, changing consumer behaviour, and international pressures. The sector is a major employer, generates substantial revenue from taxes, and is crucial for agricultural livelihoods, especially for tobacco farmers in various regions. However, growing concerns over public health, environmental sustainability, and global anti-smoking trends are creating both challenges and opportunities for industry players.
In 2024, Pakistan's tobacco industry faced significant challenges marked by declining legal cigarette production, a surge in illicit trade, and high taxation. With the increase in taxes, prices of local cigarettes have more than doubled in the past three years, resulting in a high influx of imported cigarettes, such as Mond, Milano, and Elegance, into the market. Facing the brunt of inflation, consumers are choosing lower-priced cigarettes, impacting economy brands like Morven and Capstan.
Pakistan Tobacco Co Ltd (PTC), a subsidiary of British American Tobacco, and Philip Morris International (PMI), continue to dominate the legal cigarette market and contribute significantly to government revenues, paying 98% of the taxes collected from the tobacco sector. This substantial tax contribution underscores their pivotal role in the formal economy. ?PTC remains the market leader thanks to its extensive availability and brand image, followed by PMI. The two main cigarette brands, Pall Mall and John Player Gold Leaf, contributed hugely to PTC’s success.
Small local grocers remained the leading distribution channel for cigarettes in Pakistan in retail volume terms in 2024, despite losing share over the review period. The convenience and proximity of small local grocers remained the key success factors.
The cigarettes category is projected to see a moderate increase over the forecast period; however, the growth in illicit sales is expected to outpace that of legal sales. Illicit trade continues to be a significant concern for authorities in Pakistan, and little is being done to control cross-border trade. Most illicit products come from Iran and Afghanistan, and there are frequent border skirmishes with Afghanistan border forces which result in temporary trade bans. To protect local companies and prevent revenue losses to the national exchequer, law enforcement agencies must take decisive action to eliminate illegal trade.
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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.
See all of our definitionsThis report originates from Passport, our Tobacco research and analysis database.
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