Foreign brand sales fall as price hikes collide with economic slowdown

Sales of cigarettes in South Korea fell last year in the wake of price increases, an economic slowdown and widespread anti-smoking measures, according to a Yonhap News Agency story.

Ministop Korea, the local operator of the Japan-based convenience chain store, is said to have seen its 2012 cigarette sales fall by 7.6 per cent from those of 2011. Cigarette sales at Korea Seven’s 7-Eleven convenience stores dropped by 4.3 per cent, while those at GS Corp’s GS25 chains fell by 2.2 per cent.

Convenience stores account for nearly half of cigarettes sales in South Korea.

The sales decline was led by those of foreign brands. Sales of foreign-brand cigarettes at 7-Eleven stores, for instance, plunged by 11.3 per cent while sales of local cigarettes rose by 2.6 per cent.

And while foreign-brand sales accounted for 51.4 per cent of 7-Eleven’s total cigarette sales during 2012, that figure that was down by 4.2 percentage points from that of the previous year.

British American Tobacco Korea posted a 17 per cent drop in its 2012 domestic sales and Philip Morris Korea saw its sales slide 11.2 per cent last year.

Market insiders were said to have attributed the sales drop to price increases on foreign brands. BAT Korea raised the price of its best-selling Dunhill brand by nearly eight per cent in 2011 and PM Korea raised its prices last year.

They also cited the economic situation and anti-tobacco activities.