Cigarettes in Slovakia

2020 IMPACT

COVID-19 contributes to decline due to lower incomes and health concerns

After seeing little movement in the review period, volume sales of cigarettes saw a decline in 2020. The economic impact of COVID-19 made consumers more price-sensitive, which led some people to smoke less.

Category switching is seen as consumer interest in alternatives rises

However, although some cigarette smokers smoked less, others became more interested in tobacco alternatives. Many consumers turned to fine cut tobacco and rolled their own cigarettes, as this is a much cheaper option.

Decline in illicit trade due to COVID-19 restrictions and traceability

Illicit trade of cigarettes declined significantly in 2020, due to COVID-19 border restrictions and the reduced mobility of people. This also hampered cross-border shopping activity, especially with Austria and Hungary.

RECOVERY AND OPPORTUNITIES

Tax rises set to drive value growth but volume decline in 2021

Volume sales are set to continue to fall in 2021, whilst current value sales are set to rise strongly. This is due to higher excise taxes, as the government tries to cover its growing expenditure because of the COVID-19 pandemic.

Longer-term volume decline due to further tax rises and health concerns

Nevertheless, more tax hikes are on the horizon, as cigarette excise tax is also set to increase during 2022 and 2023, according to the tax calendar introduced in 2020. This step, coupled with the weakening purchasing power of Slovak households, will continue to lead smokers to seek out cheaper alternatives in the form of smoking tobacco or economy cigarettes.

Competition from other tobacco categories set to continue to rise

Some smokers are combining the consumption of cigarettes with e-vapour products and heated tobacco products. Whilst this is expected to continue to negatively impact the volume consumption of cigarettes, it will not significantly impact overall smoking prevalence in Slovakia in 2021.