Cigar, liquor sales weak with inflation, sin tax

Due to a surge in inflation and the enduring imposition of the sin tax law, the essential sari-sari stores suffered revenue losses from a drop in sales of various cigarettes and alcoholic drinks.

Based on the latest survey of tech startup Packworks, through its mobile sari-sari store app and business intelligence tool Sari IQ, which examined the sales transactions from its network of over 300,000 sari-sari stores nationwide, it observed a downward trend in the sales transactions of cigarette brands Marlboro, Mighty and Winston, as well as alcoholic drinks Tanduay rum and Emperador brandy — all considered staples in sari-sari stores.

The study found that the combined sales of the three cigarette brands fell to approximately 12 percent in 2024 at over P392 million in gross merchandise value (GMV) compared to the previous year at more than P503 million.

Mighty posts biggest drop

Mighty recorded the largest sales decrease, at 25 percent, followed by Marlboro at 24 percent and Winston at 8 percent.

Sari-sari stores saw a decrease in cigarettes sales despite the Bureau of Internal Revenue lowering the floor price per pack to P78.58 last year from P114.60 in 2023 (Revenue Regulations No. 016-2024).

Despite the cut in floor prices, consumers’ purchasing power was weakened by the high inflation.

According to the Philippine Statistics Authority (PSA), the country’s year-end inflation for 2024 was 3.2 percent versus 2023.

Meanwhile, sari-sari store sales of Tanduay rum decreased by 17 percent, resulting in a GMV of P102 million in 2024, compared to P124 million in the prior year, while Emperador brandy sales fell by 22 percent, from a GMV of over P63 million in 2023 to P49 million in 2024.

Anabel Desuyo, a sari-store owner and Packworks app user from Negros Occidental voiced out that the high prices of liquor, coupled with the inflationary environment, could be affecting her community’s purchasing power.

Packworks chief data officer Andoy Montiel noted that the decrease in cigarette and alcohol sales may point to imminent economic and social factors.

“Our tracking data of 12 consecutive months indicate a significant shift in purchasing trends within the sari-sari store sector for cigarettes and alcohol products, which can be due to various external factors such as rising prices and supply issues, but might also be a precursor to changing internal consumer behaviors and preferences. This analysis could be used to inform regulatory governance and demand planning for our market,” said Montiel.