Cigarettes recorded a positive performance in both retail volume and current value terms in 2020 due to several factors. Overall demand continued to rise due to the further drop in illicit trade as the lockdown and states of alert as a result of the pandemic resulted in reduced travel and lower border traffic, and therefore more effective border control.
While illicit trade of cigarettes recorded significant decline in volume terms in 2020 due to the pandemic, the market had already seen a notable drop the previous year due to the efforts of local authorities which are committed to combating illicit trade, leading to the adoption of certain measures. Joint actions by the Customs Authority, the Ministry of Finance and cigarette producers to stop cigarette smuggling resulted in the Stop Smuggling programme.
Three multinationals continued to dominate cigarettes in Romania in 2020. British American Tobacco remained the clear leader, accounting for over half of overall volume sales, followed at some distance by JT International (Romania) SRL and Philip Morris.
With the rollout of Romania’s vaccination programme and various measures in place over the past year to control the spread of the virus, the government is starting to relax certain restrictions which will allow greater freedom outside of the home for consumers moving forward. February 2021 saw many schoolchildren return to the classroom, while those in low risk areas returned in May after the Easter period.
While illicit trade is predicted to record marginally stronger volume declines over 2021/2022 compared to retail sales of cigarettes, it is set to regain some lost share towards the end of the forecast period. The main factor behind a marginal revival will be rising excise taxes which will push up the average unit price.
The weighted average retail selling price for cigarettes in Romania is calculated according to the total value of all cigarettes on sale, on the basis of retail price including all taxes divided by total number of cigarettes. As a consequence, there is a calendar for increasing the excise to reach the required level set out by the EU (60% of the weighted average retail selling price), but an affordable selling price would be beneficial for all parties involved; government, manufacturers and consumers, as part of the strategy to reduce contraband.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in Romania with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Cigarettes research and analysis database.
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