Pakistan sees decline in retail volume sales of cigarettes

ISLAMABAD: Studies have revealed a decline in retail volume sales of cigarettes in Pakistan, attributed to higher taxes and increased awareness among consumers about the health risks associated with smoking.

According to a Euro monitor report, retail volume sales decreased by 1 per cent in 2022, amounting to 60 billion sticks sold annually. This trend is projected to continue with a forecasted decrease of 2 per cent, resulting in 55 billion sticks sold over the forecast period.

Euro monitor report noted that the Pakistan Tobacco Company dominated the market in 2022, holding a retail volume share of 71 per cent.

The report highlighted the impact of advertising bans on tobacco products and the COVID-19 pandemic, which contributed to rising awareness among consumers about the health risks of smoking, whether actively or passively.

Pakistan’s commitment to the Framework Convention on Tobacco Control (FCTC) emphasizes the importance of a unified pricing system for cigarettes to effectively regulate the industry and discourage consumption.

The World Health Organization (WHO) advocates for robust tax measures to reduce tobacco consumption, citing that a 10% increase in tobacco prices typically leads to a 4% decrease in overall tobacco consumption in high-income countries and up to an 8% decrease in low- and middle-income countries.

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A study by the Pakistan Institute of Development Economics (PIDE) highlighted the significant economic impact of smoking-related diseases and deaths, estimating costs of Rs615.07 billion in 2019, equivalent to 1.6% of the GDP.

Recently, the International Monetary Fund (IMF) has recommended implementing a single-tier tax structure on all international and national cigarette brands.

Currently, cigarettes are taxed in two tiers, resulting in low tax collection from the cigarette industry and an estimated 337,000 deaths annually in Pakistan.

The IMF’s objective with these recommendations is to ensure equitable taxation across all cigarette products, a move widely supported by health advocates.