Reduction in demand for cigarettes continues in Poland

2010-07-23

Tobacco producers sold 28.8 billion cigarettes to distributors in H1 2010, an increase of 200 million items in comparison with H1 2009, according to a report in Rzeczpospolita. The increase in sales came as a surprise to industry representatives, because in recent years the tobacco concerns have been reporting reductions in sales. However, estimates suggest that in 2010 the producers will sell only 56 billion items, in contrast to 61.25 billion in 2009.
Demand for cigarettes is gradually declining in Poland because of increases in excise duty, which have prompted increases in the prices of tobacco products. According to the Nielsen research agency, in H1 2010 there was a 7.4% year-on-year reduction in retail sales.
The high prices have been prompting an increase in demand for illegal cigarettes. According to the tobacco producers, one-fifth of all cigarettes on the Polish market come from illegal sources. In the European Union as a whole, illegal tobacco products account for 13% of the market.
Because of counterfeit cigarettes tobacco producers make losses of around €800m per annum, whereas wholesalers and retailers lose around €1bn a year. As a result, British American Tobacco (BAT) has decided to cooperate with the European Commission (the EC) to combat the illegal tobacco market, with the intention of investing $200m over the next 20 years for this purpose. In addition, Japan Tobacco International has signed an agreement with the EC, stating that it will spend $400m in the fight against the illicit cigarette trade.