The report titled “Cigarettes in Indonesia”, provides a comprehensive analysis of cigarette industry, demographics of cigarette market in Indonesia, cigarette leading players in Indonesia, e-cigarette development, excise tax on cigarettes, government efforts to reduce smoking and future of cigarettes market in Indonesia.
Industry Overview and Leading Players in Indonesia: Indonesia has witnessed unfavourable economic conditions in the recent years. Inflation in basic necessities has resulted in the consumer’s lower purchasing power which has indirectly affected the growth of cigarette market in Indonesia. It was observed that the cigarette market posted a negative growth due to inflation and consumers shifting towards e-cigarettes or vapour products. The machine-rolled clove cigarette (kretek) is popular cigarette among the Indonesian population. Other variants of cigarettes are hand-rolled Kretek, machine-rolled white and others. Gudang Garam, HM Sampoerna, and Djarum are the major leading players in Indonesian cigarette market. Gudang Garam leads in machine-made cigarettes and HM Sampoerna manufactures both hand-made and machine made cigarettes. It was observed that there is a stiff competition between these three leading players; therefore, it is difficult for new players to enter the cigarette market in Indonesia. The leading cigarette manufacturers in Indonesia are Gudang Garam, HM Sampoerna, Bentel Internasional Investama, Wismilak Inti Makmur, Djarum and Nojorono. These six manufacturers control the Indonesia’s tobacco and cigarette market while employing millions of workers. It is estimated that over 200,000 people die annually in Indonesia due to heart disease and cancer caused by smoking.
Demographics of Indonesia Cigarette Consumption: Indonesia’s cigarette industry is under pressure in recent years due to various reasons but hopes for positive results in the next few years. Despite another excise tax on cigarettes, the Industry Ministry of Indonesia targets a limited growth within the cigarette industry. It is a ritual that every year the Indonesian government raises the excise tax on tobacco products. The government is interested in curtailing the consumption of tobacco products in an effort to improve the health of the Indonesian population. There is less room for cigarette advertisement in Indonesian media and every pack should have a mandatory (graphic) warning image on cigarette packages. These measures had a great impact on the cigarette industry and consumption is decreasing at a slow pace. Cigarette production of cigarettes has fallen drastically and will continue over the next few years.
Indonesia is a country famous for its male smokers starting from 15 years of age or older. While smoking is decreasing across the world, it is actually increasing in Indonesia. The country has a large number of smokers who are majorly teenagers and children. There is an indication of the Indonesian government’s lack of commitment to combat cigarette consumption because tobacco companies are the major sponsors of all national sports and educational scholarships. Despite the increase in excise tax on the cigarettes in Indonesia, a packet of 20 cigarettes is still the cheapest in the world. Research indicates that majority of the poor population actually spend on cigarettes rather than on food because they choose to stay hungry than resist the need to smoke. The poor population spends an average six times more on tobacco than on dairy and egg products. Therefore, the sale of cigarettes in Indonesia is in billions every year.
Indonesia’s Future Tobacco Plans: The Indonesian government is planning to raise import duties for tobacco which is the major raw material for the production of cigarettes. The high import duty will surely enhance the welfare of Indonesian tobacco farmers. Tobacco imports are a must because Indonesia’s tobacco production is not enough to meet the consumers’ growing demand.
Government’s Effort to Reduce Smoking: There is very little effort to decrease the consumption of cigarettes because the ministry has issued a roadmap to triple the cigarette production by the y ear 2020. It is hardly a serious attempt in the country to reduce smoking compared to other countries which are desperate to reduce smoking population. It was studied that if the price of a cigarette pack is raised excessively in Indonesia then a massive campaign would be carried out to create awareness in schools, universities, media and other public places. To make sure the future generation is healthy, the Indonesian government should make strong radial efforts to reduce smoking population.
Future of Indonesia’s Cigarette Industry: Cigarette consumption in Indonesia has contributed to the poverty rate in urban areas as well as in rural areas. The most efficient solution to reduce cigarette consumption is to introduce alternative tobacco products with lower health risks such as nicotine patches, Swedish snus, e-cigarettes and HNB devices. Indonesia population were suggested to use vapour or e-cigarettes and heat-not-burn (HNB) devices to deal with cigarette consumption. The country has more than billion smokers and is leading globally with huge number of smokers. Smoke cessation products are tough to find in Indonesia, therefore, promoting the growth of cigarette industry over the coming years.
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