How Downtrading is Eroding Cigarette Excise Revenue

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October 19, 2025 | 10:29 am

TEMPO.CO, Jakarta - Smoke curled through Harsya’s workspace in South Jakarta’s Pasar Minggu area on Wednesday afternoon, October 8, 2025. The freelance photographer took a drag from his cigarette, marking a short break between shooting products for an online client. After more than six years living in the capital, the East Java native has always found cigarettes to be his ‘loyal companion’ amid the bustle of work.

But over the past two years, Harsya has had to adjust to harsher economic realities. He no longer buys premium, internationally branded cigarettes that once defined his routine. The 34-year-old has switched to sigaret kretek mesin (machine-rolled clove cigarettes, or SKM). “As long as there’s smoke, I don’t mind downgrading,” he told Tempo.

His decision stemmed from the soaring prices of premium cigarettes — machine-made light cigarettes, or SPM — whose excise rates are far higher than those on clove cigarettes. A pack of SPM now costs around Rp50,000 (about US$3), far above the Rp30,000 (US$1.8) price tag for SKM. The price gap of tens of thousands of rupiah is significant for freelancers like Harsya, who face rising living costs and still prioritize saving for the first house mortgage.

At the mid-tier SKM level, cigarette manufacturers have flooded the market with a wider variety of affordable products. National and local brands now compete to offer cheaper options without sacrificing taste. This shift among smokers like Harsya has created a growing trend in the tobacco industry known as downtrading — a consumer behavior where smokers switch to cheaper alternatives to sustain their habit.

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