In 2021, retail volume sales of cigarettes dropped dramatically. In the year, the Hungarian government raised the excise duty on cigarettes to the EU minimum level after many years of delay, which caused a significant increase in cigarette retail prices.
In Hungary, 2021 did not see much innovation in cigarettes, this being hindered by the introduction of plain packaging regulations. Since 2017, any newly released brands or extensions have to come in plain packaging in cigarettes and smoking tobacco; therefore, in 2021, manufacturers did not introduce many new products as they did not want to lose the branded packaging.
In Hungary, the sole channel for selling cigarettes is the nationwide network of commissioned National Tobacco Shops. However, these are more than just a tobacconist: besides tobacco, they can also sell fmcg products, usually at competitive prices, and due to their long opening hours, they are perceived as a convenience store by locals.
The volume sales decline of cigarettes is expected to be continual during the forecast period. The main reasons are the high price of cigarettes due to the large tax component and intensifying inflation, which will force less affluent consumers to trade down, while others might be prompted to reduce or give up smoking.
Most cigarettes were sold already in plain packaging during 2021, but the law entered into effect fully at the beginning of 2022. A flood of complaints were received by shopkeepers, and smokers complained that the flavour is worse.
With plain packaging required, companies could use different strategies to attract attention and generate sales. While some large players, such as Philip Morris and British American Tobacco, keep regular contact by text messages and e-mail newsletters, the strategy of Imperial Tobacco and Continental is personal contact by sales representatives visiting stores regularly and briefing them about products and giving good sales tips.
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RETAIL SALES OF DUTY PAID CIGARETTES The definition of cigarettes for the purposes of this study is duty-paid, machine manufactured white-stick products. This does not exclude brands of cigarettes that do not use white paper but it is designed to exclude the volume of non-machine manufactured products such as bidis/beedis (India) and papirosy (Russia), and other smoking products made with tobacco but that either do not resemble cigarettes as recognised in the US or Europe, or those that are not machine manufactured. The exclusion of these products is intended to give a more accurate picture of the "true" market for cigarettes and cigars which has been distorted in official statistics and published reports because of the inclusion of hybrid products. NB Please note that due to its central importance and integration into the industry mainstream, Indonesia’s market data does include hand-rolled kreteks DUTY-FREE sales are excluded from retail sales, as are herbal cigarettes. ILLICIT TRADE CIGARETTES Not included in retail sales, but split out separately in volume terms only. Defined as non-duty paid cigarettes (includes smuggled & counterfeit/fake products combined). Legitimate cross-border sales are considered duty-paid. Sales arising from a foreign national purchasing cheaper cigarettes in bulk in a neighbouring country for personal use and exported back are attributed to the country where the purchase is made (e.g. bulk cigarette sales by British nationals in France are attributed to France).See All of Our Definitions
This report originates from Passport, our Cigarettes research and analysis database.
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