The legal cigarette market is dominated by one company, Souza Cruz SA, controlled by the British American Tobacco Company. In the 1990s, Souza Cruz marketed approximately 20 cigarette brands in seven price categories; its share of total cigarette sales increased from 78 percent in 1994 to 81 percent in the late 1990s. In second place is Phillip Morris of Brazil, with 17 cigarette brands and 13.9 percent of the market, down from 18 percent in 1994. The remaining 5.1 percent of cigarette sales is shared by small and medium companies.
The manufacturers are also distributors, imposing tight controls on retailers to maintain product freshness and quality. Direct distribution and assistance to retailers also maintains competitiveness.
Despite the overwhelming dominance of Souza Cruz, an intense struggle for cigarette market share is being fought between that company and Phillip Morris, mainly through price competition.
