The long communicated new excise duty on cigarettes has been valid since 1 January 2022. However, in practice this has only meant a change in the way of calculating excise and it has not led to a meaningful increase in prices, with it now using the calculation method of “excise minimum” (average retail price).
Cigarettes suffered heavy losses in 2020 with lockdowns, rising unemployment, the introduction of a ban on flavoured cigarettes, a sharp rise in taxes and other factors putting huge pressure on sales. It had been expected that sales would continue to decline in 2021 with COVID-19 having caused more people to reflect on their lifestyle habits and ways to improve their health.
Philip Morris Polska SA continued lead cigarettes in 2021, but it continued to lose share to nearest rival JTI Polska Sp zoo. Philip Morris is no longer investing in cigarettes and instead it is focusing on developing heated tobacco products with the latter perceived to be a less harmful way of consuming tobacco.
JTI Polska Sp zoo continued to record dynamic double-digit growth in retail volume terms in 2022 with the company taking further share from leading player Philip Morris. Given the latter’s increasing focus on heated tobacco and other areas of its business it is possible that JTI will take over the lead by the end of the forecast period.
It is highly likely that the price of cigarettes will rise sharply over the forecast period, especially the prices for the economy brands. Companies have been battling for a while now to keep price increases to a minimum (often selling them with almost no markup), but for some they have already reached the point where they can longer absorb any more increase in costs.
The war in Ukraine that started on 24 February 2022 is likely to have wide reaching implications, especially for neighbouring countries such as Poland. Poland has become a second home for many Ukrainians over the last decade and large numbers of Ukrainians have fled to Poland since Russia’s invasion as they look to escape the war.
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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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