The tobacco manufacturing industry is one of the largest industries with global revenue reaching USD 941 billion in 2023 and an expected annual growth rate of 2.55% in the period 2023 to 2028. Although tobacco companies are gradually switching to developing "smokeless" and "harmless" products to catch current trends, cigarettes still play an important role and create the largest source of revenue for businesses.
These products also contribute the best amount to market revenue, equivalent to USD 834.7 billion by 2023. Every year, tobacco manufacturing companies continue to supply the market with billions of cigarettes.
In the domestic market, Vietnam is one of the 15 countries with the highest number of smokers in the world with 15.4 million people. Of which 14.8 million are men, more than 600 thousand are women. This is also the third country in the ASEAN region with the highest number of adult smokers, just behind Indonesia and the Philippines. In particular, the rate of new tobacco use in cities tends to increase, especially among students and young people.
According to a recent report, Vietnam's tobacco industry in 2022 is estimated to be worth VND 105 trillion (~4.4 billion USD). Although the harmful effects of drugs on human health are huge. Each year, the state has to spend about 1% of GDP to support the costs of tobacco-related diseases. However, it cannot be denied that the industry's profits contribute to the state budget.
Some types of tobacco products on the Vietnamese market
Among cigarette manufacturing companies in Vietnam, Vietnam National Tobacco Corporation (Vinataba) is the largest enterprise with approximately 67% domestic market share and 75% export market share (2022). This is also the leading company in terms of contribution to the state budget with more than VND 10 trillion per year.
Vinataba
Vietnam National Tobacco Corporation has become one of the State's enterprises, holding the number one position in Vietnam's tobacco industry, positively contributing to the state budget and the national economy.
The enterprise is a complex of many subsidiaries with 11 cigarette production units, 3 raw material units, 2 auxiliary material units, 1 scientific research unit, and 2 joint venture companies manufacturing tobacco production with foreign partners.
Every year, Vinataba produces and distributes to the domestic market and exports billions of packs of cigarettes with familiar brands such as Traditional Vinataba, Vinataba Luxury, Vinataba Demi Slims, Vinataba Hanoi Style,... adapting the requirements of everyone from high-end to low-income people.
In the period 2020-2022, Vinataba has witnessed a strong rise in net revenue, standing at more than VND 3,100 billion in 2022. Regarding profit after tax, although there was a slight decline in 2021, this number quickly recovered and was higher than the profit level in 2020, reaching about VND 670 billion.
Companies belonging to the Vinataba group
Invest directly in subsidiaries
Saigon Tobacco Company Limited
Thang Long Tobacco Company Limited
Hai Phong Tobacco Company Limited
Vinataba Company Limited - Philip Morris
Indirect investment in subsidiaries
Thanh Hoa Tobacco Company Limited
Joint venture
BAT-VINATABA joint venture company
Saigon Tobacco
On December 6, 2005, based on the government's decision, Saigon Tobacco Factory under VINATABA Corporation was changed to Saigon Tobacco Company Limited.
With the main industry being tobacco production, the Company's products are divided into 3 groups including popular product lines (Fasol, Tay Do, ERA, Travel...), and middle and high product lines. (Hoa Binh, Cotab, Young Star, Saigon Green, Saigon Gold, Saigon Red, Saigon Silver...), meeting the requirements of all subjects from middle-class customers to workers and farmers.
About the business picture of Saigon Tobacco Company in the three years 2020-2022. The company had strong development in 2022 after two years of net revenue of only about VND 7200 billion. Meanwhile, unlike the growth of net revenue, profit after tax always had a stable development, reaching more than VND 450 billion in profit by 2022.
Thang Long Tobacco
Thang Long Tobacco Company Limited was established in 2005 and is a member company of Vietnam Tobacco Corporation. After more than 50 years of establishment and development, the company has now become one of the typical units in the tobacco industry. Currently, the company is operating with the most modern tobacco processing line with a capacity of 2,500 kg/hour in Vietnam, mainly producing the brands Thang Long, Thu Do, Hoan Kiem,...
Thang Long Tobacco had net revenue going up steadily each year, with a growth rate of 6-7% per year. In 2022, the brand's net revenue achieved more than VND 7500 billion. Along with the net revenue trend, the company's profit after tax also recorded a positive trend, with profits increasing by about 5.5% per year.
Net revenue of some cigarette manufacturing companies in Vietnam
Vina-BAT joint venture
In 2011, VINA - BAT JV was established through cooperation between Vietnam Tobacco Corporation (Vinataba) and British-American Tobacco Marketing (Singapore) Private Limited (BAT) with the purpose of producing cigarettes of BAT Group, Vinataba, and the joint venture companies' own tobacco labels. The most famous of which is the 555 cigarette brand.
Net revenue and profit after tax of the Vina-BAT Joint Venture showed strong development in recent years. While the company witnessed vibrant development in net revenue in the period 2020-2021, with a climb of 17.3%, profit after tax earned more in the period 2021-2022, achieving nearly VND 230 billion.
Hai Phong Tobacco
On August 14, 1991, Hai Phong Tobacco Company Limited was established with the original name Hai Phong Tobacco Factory. In 2007, the company transformed the Company into Hai Phong Tobacco Two-member Limited Liability Company under Vietnam National Tobacco Corporation.
After more than 30 years of development, the company has produced and launched mainly 4 types of products: Virginia Gold International, Seven Diamonds Finest Virginia, Seven Diamonds Filter King, and Seven Diamonds Crafted Virginia.
The net revenue of Hai Phong Tobacco Company had a tendency to grow quite stably each year. In 2022, the brand's net revenue will reach nearly VND 700 billion. However, contrary to the net revenue trend, the company's after-tax profit situation fluctuated highly. After a sharp increase in profits in 2021, the profit situation showed signs of falling moderately in 2022, recording more than VND 27 billion.
Thanh Hoa cigarettes
In November 1965, Cam Le Tobacco Factory officially started construction. In 1990, the company changed its name to Thanh Hoa Tobacco Company, then became a subsidiary of Vinataba Corporation in 2006.
Currently, Thanh Hoa tobacco company is a child of Thang Long Tobacco Company Limited after the policy of restructuring the corporation in 2016. The company produces many types of products such as cigars, cigarettes, and so on with the famous brand name Bong Sen.
Thanh Hoa Tobacco saw a moderate decrease in net revenue in 2021 but the company quickly regained climb in 2020. Specifically, the brand's revenue went down slightly by 6% in 2021. By 2022, net revenue rose again, standing at about VND 700 billion. Meanwhile, the company's after-tax profit has had a breakthrough in the last two years, reaching more than VND 5 billion per year.
Vinataba - Philip Morris
Philip Morris has been present in Vietnam since 1994, with the establishment of a branch and cooperation with Vinh Hoi Tobacco Factory (now Saigon Tobacco Company) to produce Marlboro brand cigarettes. After that, the two sides negotiated and agreed to switch from the form of production cooperation to the form of joint venture production at Vinasa Joint Venture Company. In November 2010, Vinasa Joint Venture Company was renamed VINATABA - PHILIP MORRIS Company Limited.
The business situation of Vinataba - Philip Morris company tended to grow in 2021 in both net revenue and profit after tax, but this number has decreased again in 2022 to a level nearly equal to 2020, achieving revenue of more than 470 billion with a profit of nearly VND 30 billion.
Profit after tax of some cigarette manufacturing companies in Vietnam
Khatoco (Khatoco Trading Limited)
Established on July 1, 2002, the company is a member unit of Khanh Viet Corporation. In particular, three prominent production industries at the company are wholesale and retail of domestically produced cigarette products, the fashion sector including fabric, ready-made garments, shoes, sandals, handbags,... and products from ostrich and crocodile meat.
In terms of tobacco production, this is Khatoco's key industry with a closed production chain from growing raw materials and producing products to distributing them to the market. Currently, Khatoco has key and traditional products including WARHORSE, SEABIRD,... In there, WHITE HORSE and EVEREST are joint venture cigarette brands with Singapore's BAT.
The period from 2020 to 2022 witnessed many fluctuations in the business results of Khatoco Trading Company Limited when the company's net revenue recorded a slight decrease in 2021 but then improved rapidly, increasing nearly 20% over the same period last year with a figure of nearly VND 6,650 billion. Khatoco's profit after tax also showed positive signs with positive growth year over year, reaching nearly VND 140 billion in 2020.
Dofico
Dong Nai Food Industry Corporation is one of the strong economic groups, formerly known as Dong Nai Tobacco Factory. After more than 30 years of development, the company has been present in many different industries such as cigarette production and business, trade - services, tourism, livestock farming, rubber latex planting, and exploitation, etc.
In the field of cigarette production, Dofico brings to the market about 500 million packs a year. Dofico is famous for the Bastos brand after the company implemented a copyright transfer contract for the Bastos cigarette brand with the Tobacco company of the French Bolloré group (now part of the British Imperial group) in 1996. Bastos products, Dofico also produces high-quality cigarette products such as Tri An, Coker, Dotax, Donagold, Donataba, and Rocco to meet the needs of domestic and foreign consumers.
Saigon Industry Corporation
The predecessors were businesses operating in key industries under the City Department of Industry. Ho Chi Minh City, CNS was established according to the policy of reorganizing state-owned enterprises of the City's leaders. On March 27, 2006, Saigon Industry Corporation was established with 8 subsidiaries, 3 affiliated companies, and 5 affiliated factories. The main business lines are Mechanical Engineering, Chemicals, Electronics - Information Technology and Food.
Regarding the field of growing, processing, and trading tobacco products, CNS currently has 03 operating factories and 04 distribution companies and sales agents across the country in the field of processing tobacco raw materials. CNS's main products include Craven "A", Khanh Hoi, Ben Thanh, Cho Lon brand cigarettes, and a wide range of other domestic products... mainly meeting the domestic market.
Vietnam's market is currently opening up new opportunities for nicotine and tobacco products. Products such as electronic cigarettes and heated cigarettes are no longer strange in the market and are attracting the attention of a diverse range of customers, especially young people. In addition, the circulation of smuggled cigarettes, such as Jet and Hero, is becoming more popular, not only increasing the risk of tobacco use but also causing huge tax losses to the budget, amounting to more than VND 7,000 billion per year.
Therefore, to protect public health as well as the interests of manufacturers, the government needs to implement stricter control measures on imported goods, develop appropriate tax policies for different types of this special product, and simultaneously review disguised tobacco marketing campaigns to prevent their spread among youth and the community.
Source: Vietdata's Vietnam cigarette market report in 2023