Stringent Laws and Taxes Affect the Growth of Russia Cigarette Market: Ken Research
Posted on 30 October 2017 by KenResearch Food and Beverage,
Russia is the world’s second-largest cigarette manufacturer after China. The country experienced inflation and economy downfall in the past years and has also stabilized. Majority of the population is addicted to high levels of smoking and alcoholism. Smoking remains widespread in Russia with approximately 41.8 million adult smokers who are either regular or occasional smokers.
Cigarette smoking incidences are continuously growing in Russian men, women and youngsters over a period of time. Russia has imposed excise tax on cigarettes, implemented strict laws related to smoking in public places and workplaces, as well as required reductions in tar and nicotine levels and ban on smoking advertisements in order to create awareness in the Russian smoking population. Russia will witness a continuous increase in the cigarette price and may become even more than in European countries. Every year an approximate of four hundred thousand Russians die of smoking-related diseases. It is also recorded that the number of smokers reduced by a ten percentile in the recent years after government restrictions.
In the year 2003, electronic cigarettes were invented. The electronic cigarette market witnessed a positive growth due to its wide publicity despite criticism from various health organizations in Russia. Electronic cigarettes were promoted as safer substitutes to cigarettes than tobacco and contained nicotine. Majority of the countries around the world have banned the sale of electronic cigarettes due to various health reasons and nicotine.
According to the study “Cigarettes in Russia”, cigarettes price in Russia is much less compared to other countries worldwide. Cigarettes are sold at various stalls and supermarkets. Earlier consumers could view cigarettes in the storefront before making a purchase, however, after stringent laws were passed this option was closed for all. Russian laws prohibit smoking in public places such as parks, beaches, hotels, clubs and many other public places. The Russian government has increased cigarette prices leading to shut down of many stalls. Cigarettes now in Russia are sold only in regular shops or in specialty stores.
The Russian government targets to reduce the number of smoking population in the country in the next 5 years or increase consumer spending income by inflation of tobacco products. It also has implemented a series of restrictions and standardisation of tobacco packs. For the past ten years the Russian Health Ministry is fighting against tobacco makers and fashion for smoking, however there was no significant change in the country’s tobacco usage.
The Ministry of Health of the Russian Federation has taken up the project of the Concept of State Policy Against Tobacco Consumption for 2017-2022. This project focuses on the reduction and consumption of tobacco products by men, kids, teenagers and pregnant women. It also focuses on the prevention of distribution of new types of tobacco products such as filling for hookahs and vapes to create health awareness in Russians. However, there would be a gradually rise of excises on tobacco products to reach the average level of other countries worldwide. The ministry believes that these actions may lower the demand for tobacco and other tobacco products. In addition, all the tobacco manufacturers are required to redress the damage caused to the ecology from tobacco wastes. An ecological tax is imposed on cigarettes along with the uninterrupted rise of tobacco excises.
Smoking is banned in spaces for communal apartments, all types of automobile public transport and short-distance and international transportation, places that are closer than 3 metres from bus stops and entrances to shopping centres, in the underground and surface pedestrian crossings, in people's own transport in presence of kids or near people who are against tobacco smoking, educational institutions.
According to the Russian statistics, cigarette production was reduced by almost twenty percentile which is a positive sign. The cigarette production and consumption market in Russia will witness a drastic downfall in the coming years and this trend may continue for a long time in the near future.
Ankur Gupta, Head Marketing & Communications