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Tobacco in Brazil 

Declining tobacco volume sales

Volume sales of cigarettes, which account for the majority of tobacco sales, declined in 2008 as a result of increased IPI (federal VAT) tax rates in July 2007. However, cigarettes still managed to record good value growth due to rising unit prices. Although overall sales remain limited, cigars recorded both value and volume growth in 2008, with demand being boosted by the fact that the appreciation of the Brazilian Real resulted in a drop in the price of imported products.

Government authorities close five local cigarette manufacturers

Since 2007, the Federal Revenue & Customs Administration has closed a number of small cigarettes manufacturers due to IPI tax evasion and illegal trading. American Virginia and Sudamax were the first companies to be closed. American Virginia owes taxes of around R$2 billion while Sudamax had its operations shut down after a large Federal Police and Federal Revenue & Customs Administration investigation. The company owned the Paraguayan-based factory Tabacalera Sudan which had been manufacturing cheaper cigarettes which were smuggled into Brazil illegally. In 2008, Alfredo Fantini, Phoenix, and Cibrasa were also closed due to IPI tax evasion.

Philip Morris and Souza Cruz continue to develop new innovative products

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