Tobacco in Bosnia-Herzegovina experienced a fluctuating performance over the review period. While taxes and tobacco use legislation continue to constrict sales of traditional tobacco products, primarily cigarettes and smoking tobacco, consumers are turning to illicit trade for affordable smoking alternatives.
Cigarettes reached a double-digit retail volume decline in Bosnia-Herzegovina during 2017, while value sales and retail volume sales recorded even stronger declines in smoking tobacco. Domestic manufacturers and other players have warned about this trend developing for years, but authorities were slow to react, enjoying constant increases in tobacco-related tax and excise revenues.
The most recent wave of consolidation in regional tobacco has been driven by British American Tobacco, initially acquiring the business from the largest regional tobacco player – Adris Grupa, following through with the acquisition of Fabrika Duhana Sarajevo and of brands from Bulgartabac, including all those manufactured in its Bosnia-Herzegovina subsidiary Fabrika Duvana Banja Luka. British American Tobacco also bought into some of the largest kiosk chains in Bosnia-Herzegovina, including iNovine, Tobacco Press and Lafka.
Considering that prices of tobacco products are fixed and declared clearly on duty paid marks, they are identical across all retail channels. This takes pricing out of the equation for retailers and does not affect where consumers buy their tobacco, illicit trade excluded.
The biggest issue present in tobacco is illicit trade. Addressing this is the leading priority for the authorities over the forecast period.
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