Sari-sari stores in the Philippines saw lower cigarette and liquor sales in 2024 amid rising prices, according to data from tech startup Packworks.

Packworks’ data came from its mobile application and business intelligence tool Sari IQ, which analyzed sales transactions from its 300,000 sari-sari store partners nationwide.

The tech startup’s data found that combined sales of Marlboro, Mighty, and Winston dropped 22% to P392 million in gross merchandise value (GMV). (Editor’s note: An earlier version of this article misstated that the drop was 12%. This was based on Packworks’ initial release which it has since corrected and is now reflected in this 1st update. )

“Mighty recorded a marked decrease of 25%, followed by Marlboro at 24% and Winston at 8%,” Packworks said.

As for Tanduay Rum and Emperador brandy, sari-sari store sales of these two liquor brands slipped 17% to a GMV of P102 million in 2024.

Sari-sari store owner Anabel Desuyo said high inflation and liquor prices may have affected her customers’ purchasing power.

“Dahil po nagtaas ang presyo ng ibang rum at dahil po siguro sa hirap ng buhay,” she explained.

(Because the price of rum products increased, as well as the difficult economic situation.)

Under the country’s tobacco tax law, the tax rate of tobacco products was raised by 5% beginning 2024. The Sin Tax Reform Law also imposed a 22% ad valorem tax on distilled spirits such as rum, with specific taxes to be adjusted annually.

While headline inflation averaged at 3.2% in 2024, inflation of tobacco and alcohol prices slowed after peaking at 8.6% in February.

Not just inflation, sin tax

Packworks’ chief data officer Andoy Montiel pointed out that the sales drop could be due to shifting consumer behaviors and preferences.

Fortune Tobacco Corporation (FTC) — which held a 70.5% market share in 2019 — cited a shift towards vaping as one of the reasons its volumes declined from 23.8 billion sticks sold in 2023 to 21.1 billion sticks last year.

“The decrease was attributable to affordability issues, rising illicit trade and the growing popularity of vaping,” its parent firm, Lucio Tan’s LT Group, said in March.

FTC did see its profits climb 12% that year, but this was attributed to higher dividends from Philip Morris FTC (PMFTC) and foreign exchange gains.

PMFTC is a joint venture between Tan’s FTC and Philip Morris International.

Despite revenue losses from tobacco, a study by the Food and Nutrition Research Institute (FNRI) found that the country’s smoking prevalence rose from 14% in 2021 to 18% in 2023.

When the Sin Tax Act was first signed into law in 2012, a former chain smoker told Rappler that the additional levies drove prices of popular brands such as Marlboro and Winston to around P100 per pack.

With the skyrocketing prices, he turned to cheaper “brandless” cigarettes sold by market vendors, adding that the popular brands may have become a luxury. He also said the unbranded cigarettes tasted the same and had similar packaging.

The government has since ramped up its crackdown on illicit cigarettes and vape products. In February, the Bureau of Internal Revenue destroyed P2.1 billion in illicit cigarette packs, which had an estimated tax liability of around P6.4 billion.

The Bureau of Customs also confiscated around P3.6 billion in vape products and parts in 2024.

Targeting the youth

Health professionals in the Philippines and abroad have been warning of the detrimental effects of vaping. The FNRI’s National Nutrition Survey found that smoking prevalence among Filipino adolescents more than doubled from 2.3% in 2021 to 4.8% in 2023.

A common misconception surrounding vaping is it is a healthier alternative to traditional cigarette smoking. But last year, a 16-year-old girl was the Philippines’ first case of e-cigarette or vape-associated lung injury in the Philippines. [READ: DOH confirms 1st case of vaping-related illness in PH]

“According to the latest Global Youth Tobacco Survey, one out of every seven Filipino youth aged 13-15 is now using vapes. This alarming trend is not a coincidence but a result of the tobacco industry’s calculated marketing tactics targeting the youth,” said Maricar Limpin, former president of the Philippine College of Physicians.

The Sin Tax Coalition estimates that alcohol consumption kills 27,000 Filipinos annually, while the Philippines recorded 83,000 tobacco-related deaths in 2023.

In January, House lawmakers filed a measure seeking to suspend the 5% tax increase on tobacco products for the entire 2026, replacing it with a 6% increase in every two years beginning 2027.

Several advocacy groups opposed the bill, saying the bill signals Congress’ prioritization of the tobacco industry over Filipinos’ health.

“More than 115,000 Filipinos die yearly because of these harmful products. Taxing these substances is a life-saving measure, more than an economic tool. It is our responsibility to protect the next generation from preventable diseases and early deaths caused by these harmful products,” Philippine Medical Association president Hector Santos said.

– Rappler.com