Smoking prevalence continues to decline in Eastern Europe, with retail volume sales of cigarettes also falling. Some consumers continue to try and cut down on their smoking or quit altogether for health reasons, brought into even greater focus by Coronavirus (COVID-19), as a virus that attacks the respiratory system, or due to reasons of cost, with the pandemic’s economic impact adding to the pressure on household budgets that tobacco tax rises had already been affecting.
Sales of cigarettes continued declining in Eastern Europe in 2020, with most countries in the region recording falling unit volumes. Rising tax levels continue negatively impacting sales of cigarettes, as have the economic consequences of the measures implemented to try and contain the spread of the COVID-19 virus.
It was not all bad news for cigarettes players in Eastern Europe, with some countries seeing a marked decline in illicit trade, with cross-border imports and smuggling in some countries hit by the forced closure of national borders as an anti-COVID-19 measure. However, in some countries, eg Poland, illicit trade saw an improved performance in 2020 due to the financial impact on households of the pandemic, while, even in those countries in which a strong decline was seen, eg Russia, a strong rebound is expected in 2021.
Flavour capsules are expected to enjoy further growth in Russia and Ukraine, the region’s two biggest markets. New products developments continued to be seen in this area in Russia in 2020, where the trend is moving ahead in line with the increasing popularity of compact cigarettes. However, sales of flavoured cigarettes are now banned in all the EU’s Eastern European markets.
Sales of cigarettes are expected to continue declining in unit volume terms in Eastern Europe. Rising tax rates and health considerations will still be exerting downward pressure on smoking prevalence and sales, while increasing competition is being seen from new products like heated tobacco, with major industry players increasingly focusing on such new product areas. Illicit trade will also continue to be a thorn in the side of the tobacco industry.
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