Brazil Tobacco Sales Showed Slight Rise in 2011, Says MarketLine22 Oct 2012 • by Natalie Aster
As part of its strategy to reduce the number of smokers, the Brazilian Government approved a new decree that changes the taxation over cigarettes in Brazil. The Decree 7.555 was supposed to start on 1 December 2011, but was postponed and commenced on 1 May 2012. According to the new decree, Industrial Product Tax (IPI) was increased by 40% in the first year and is fixed to grow until 2015. The growth will be 23% in 2013 and 2014, and 18% growth in 2015. The Revenue Service also established a minimum price for cigarettes for each year from 2012 to 2015. Besides, cigarettes with lower prices will pay more taxes compared to cigarettes with higher prices.
In addition to increasing taxes on cigarettes, ANVISA decided to ban menthol and some flavours such as gillyflower, chocolate and strawberry from cigarettes, cigars, cigarillos and other tobacco products in February 2012 as the Health Surveillance Agency claims that the use of additives stimulates young people to start smoking. Manufacturers will have 18 months from the official publication of ANVISA’s decision to pull flavoured cigarettes from retail in the national market, and 24 months to withdraw other flavoured tobacco products.
According to the report “Tobacco in Brazil” by MarketLine, after experiencing a weak performance for most of the 2006-2011 period, cigarettes showed a slight increase in volume sales in 2011. Mid-priced and premium cigarettes showed a better performance compared to economy cigarettes, which suffered from competition from a sizeable illicit market. Lately, Souza Cruz has been focusing investment on premium products rather than economy ones, with innovations in brands like Lucky Strike and Dunhill.
Tobacco in Brazil
Published: September, 2012
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