While cigarettes in Russia continued to post a strong drop in retail volume sales in 2020, the pace of decline was slower in comparison with 2019. In line with the outbreak and spread of the Coronavirus (COVID-19) pandemic, the government’s measures to restrict border movements helped the legal market in cigarettes.
The government continued to take measures aimed at reducing the illicit trade in cigarettes. These included the introduction of a minimum price, mandatory labelling of cigarettes and restrictions on the transportation of unmarked cigarettes.
The competitive landscape in cigarettes remained concentrated at the end of the review period. The category continued to be led by JTI Russia (GBO: Japan Tobacco) in retail volume sales terms, although the company’s main challengers, Philip Morris International, British American Tobacco and Imperial Tobacco Sales & Marketing, made small share gains in 2020.
Retail volume sales of cigarettes are expected to post a steeper decline in 2021, compared with 2020. This is partly due to ongoing health awareness among the Russian population, which is predicted to see further declines in smoking prevalence and the number of cigarette smokers through the forecast period.
While not escaping the general decline in retail sales, the economy segment is expected to continue to post retail volume share growth in 2021 and through the forecast period. As excise taxes are set to rise, higher average unit price growth is predicted to see consumers shift to more affordable, or illicit, brands.
A rebound in illicit trade is predicted in 2021 as borders reopen and consumers remain highly price-sensitive. Through the forecast period, illicit trade volume sales are predicted to fall steadily; however, by 2025, illegal volume sales are predicted to be higher than in 2018 and account for a higher share than in 2019.
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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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