Cigarette Manufacturers Turn to Exports Amid Mounting Challenges

Few industries have experienced the level of upheaval witnessed by tobacco, a sector that has undergone not merely an evolution but an outright revolution. Decades ago, lighting up a cigarette was a common sight—on airplanes, in offices, even in restaurants. Today, the scene has shifted dramatically. In many places, smoking is confined to shadowy corners, banished from most public spaces, and under constant siege from regulators and anti-tobacco advocates. The global sentiment has shifted, and Pakistan is no exception. The landscape for tobacco companies in the country, once dominated by advertisements plastered across billboards and televisions, is now shaped by an entirely different set of challenges—chief among them, government-imposed taxes and the scourge of illicit trade.

This changing environment is especially tough on the two multinational giants that dominate the market in Pakistan: British American Tobacco (operating as Pakistan Tobacco Company) and Philip Morris International. Together, they control a whopping 90% of the market share, leaving a mere 10% for small, local players, many of whom have set up their own manufacturing units. The multinational corporations (MNCs) argue that they shoulder the brunt of the industry’s tax burden while local manufacturers, along with illegal smuggling operations, evade taxes entirely.

The consequences of this imbalance are now coming to a head. Facing shrinking margins in the local market, tobacco companies have increasingly turned their gaze outward. Pakistan, the seventh-largest producer of tobacco globally, is witnessing a shift in strategy: cigarette exports are surging as local sales stagnate. But is this pivot a voluntary business decision or the inevitable result of a hostile domestic market?