TI March 2016

Issue link:

Contents of this Issue


Page 29 of 51

30 TOBACCO INTERNATIONAL MARCH 2016 A n upward trend for total cigarette imports into Saudi Arabia has continued over the past several years, although the source of the supply has changed. Total cigarette imports reported by Saudi Arabia reached 35B pieces in 2011 and remained at a high level throughout 2015. Just a decade ago, Saudi Arabia was the second major export market for US cigarette ex- ports. Then a switch to Germany, Switzerland and some other European suppliers— plus Turkey—occurred. Saudi Arabia had been the second major destination for US cigarette ex- ports from 2004–06, with shipments that reached 14B pieces annually for an average value of nearly $300M. While total cigarette imports into Saudi Arabia reached 35.8B pieces, val- ued at $771M, in 2011, a nearly com- plete blink out for US cigarette exports to Saudi Arabia occurred after 2005 (together with losses to other import- ant markets) which meant a steep de- cline for total US cigarette exports. Germany and Switzerland stepped up and both have become leading sup- pliers of Saudi cigarette imports in the last five years, with Saudi Arabia ba- sically shifting sources, moving from the US and over to European cigarette exporters in the last decade. Credit Germany with providing about 15B cig- arettes annually to Saudi Arabia from 2013-15, with very few cigarettes de- livered during that same period from the United States—even though leading PMI brand Marlboro remains dominant in the region. Throughout 2004 it was possible to see Saudi men buying cartons of US cig- arettes in supermarkets. Women tended to buy cigarettes by the pack in small- er neighborhood stores. A 150 percent ad valorem tax on retail cigarette sales meant higher retail prices, eventually moving in the direction of $2 per pack of 20, although competition among major grocers has kept retail prices for cigarettes comparatively low. No cigarettes are manufactured in Saudi Arabia and foreign investors have been discouraged from thinking about building a new factory in the region. Even the smoking tobacco for the re- gion's popular water pipes is imported. It is India and the EU that provide most of the smoking tobacco imported into Saudi Arabia. Since the import duty is the same 150 percent ad valorem as in other Gulf Cooperation Council mem- bers, not much of a transit trade exists for cigarettes through Saudi Arabia. Tobacco leaf is not grown commer- cially in Saudi Arabia. Yet, neighboring Yemen produces over 26,000 tons of to- bacco. Yemen also produces some ciga- rettes that are exported to Somalia and Kenya via air cargo. Water pipe tobacco is carried across the border by workers from Yemen when they go to work in Saudi Arabia. MARKET SPOTLIGHT Saudi Arabia: Importing More Cigarettes from Europe Cigarette imports into Saudi Arabia continue to rise, but U.S. manufacturers have seen their share of the bustling market slide considerably. –By John Parker

Articles in this issue

view archives of TOBACCO INTERNATIONAL - TI March 2016