Philippines: Tobacco Market

Share on facebook
Share on twitter
Share on email
Share on whatsapp
Share on linkedin

With 117Mn population (13th most populous country), 25 years of median age and 1.5% annual population growth, Philippines is a key growth market in the Asia-Pacific Region for the tobacco majors. PMFTC (Philip Morris Fortune Tobacco Corporation), a 50-50 JV by PMI and local conglomerate LT Group (formed in 2010), controls 62% of the 52Bn-stick market. Actually, Philippines was PMI’s 6th largest market in FY2022 in terms of volume: 32.2Bn sticks (32Bn cigarettes, 0.2Bn heated tobacco).

However, booming sale of cheap/smuggled cigarettes (driven by the higher excise taxes imposed by the government) is causing the legal cigarettes to shrink (fast) in the Philippines. The market is more than halved in the past decade: from 109Bn stick in 2012 to 52Bn sticks in 2022. And, the market conditions are even more dire in 2023: an industry-wide (excise driven) price increase in Q1, illicit incidence increasing further and unfavorable trade inventory movements. In the first nine months of 2023, market volume declined by 20% and PMI’s SoM is down to 56% (i.e. PMI’s shipment volume is down more than 26%).

Under difficult operating conditions, LT Group’s tobacco earnings (thus, PMI’s earnings) slid 25% to P9.06Bn ($162Mn) in YTD20231. Accordingly, Fortune Tobacco’s contribution to the LT’s earnings is now down to 47% (from 86% in 2021 and 61% in 2022). LT Group is trying diversify operations as tobacco sales dwindle2: the contribution of Philippine National Bank to LT’s earnings is now up to 40%. Meanwhile, in the absence of “diversification” option, PMI remains eager to invest further by bringing its smoke-free products to the market:

– in November 2022, PMI launched BONDS by IQOS (a compact and affordable heated tobacco device; resistive external heating with no blade) and BLENDS (tobacco sticks)

– in October 2023, PMI launched IQOS ILUMA and disclosed its intention to launch ZYN soon.


  1. ↩︎
  2. ↩︎

Call Request:

We will reach out to you within 24 hours to discuss your request. Please note that we only respond to requests with a valid business e-mail address
Disclaimer: The content in our Market Pulse section is/shall not be construed as investment advice. It is for informative purposes only and does not take into account the individual needs, investment objectives and specific financial circumstances. Any action taken upon the information in our Market Pulse section is strictly at the reader’s own risk. We assume no responsibility or liability for the actions taken. Moreover, we also assume no responsibility or liability for any errors or omissions in our content – which is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness even if we only depend on the infromation sources that are believed to be accurate.

Session Request

We will reach out to you within 24 hours to discuss your request. Please note that we only respond to requests with a valid business e-mail address