As with all fmcg industries in the country, the war has strongly impacted the tobacco market in Ukraine. For example, there is a much-diminished consumer base, with approximately eight million people – some 20% of the population – estimated to have left the country since the outbreak of the war.
While tobacco consumption in 2022 was hit by a major reduction in the size of the potential consumer base, due to many Ukrainians leaving the country when war broke out, cigarette consumption has been supported, to an extent, by more intensive smoking by members of the armed forces, as well as by some civilians, because of high stress levels being experienced in wartime. Sales of illicit cigarettes remain high due to the lower purchasing power among Ukrainians; while illicit unit volumes fell slightly in 2022, they were still more than double their 2020 levels after the major increase that was seen in 2021.
Prior to the war, Philip Morris Ukraine and British American Tobacco Ukraine were the two biggest players in terms of retail volume sales of cigarettes, followed by JT International Ukraine and Imperial Tobacco Production Ukraine. The two leaders were tending to focus less on cigarettes and more on heated tobacco products, which was impacting their shares in cigarette sales, even if this was partly offset by growth in heated tobacco products.
All distribution channels, bar retail e-commerce, were recording declining sales in 2022, and even online sales growth was much slower than in the previous two years, when internet retailing had been benefiting from the COVID-19 restrictions in place during the pandemic. Supermarkets and hypermarkets gained share from tobacco specialists and small local grocers in 2022, with shoppers preferring to buy everything in one place, but also due to the fact that large modern retail groups were able to steer their way through the various wartime difficulties more successfully than small private businesses.
In terms of cigarettes, the long-term market trend will continue to be seen – falling unit volume sales as the smoking prevalence continues to decline, with smokers either giving up the habit or switching to one of the various alternatives. The local economy is likely to continue being affected by high inflation rates and shrinking disposable incomes, while a much-reduced consumer base is likely as long as the war continues, due to war-related migration and military losses.
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Tobacco
Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.
See All of Our DefinitionsThis report originates from Passport, our Tobacco research and analysis database.
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