Analytics, Baltic States – CIS, Estonia, Markets and Companies

Last year, according to Japan Tobacco International, the price difference of cheap cigarettes sold in Estonia and in Russia was more than four times. A cheaper category pack of cigarettes could be bought at the price of 4.22 kroons in Russia in the beginning of the year while in Estonia one had to pay 18.92 kroons, writes EPL Online/ LETA.

Estonia was the first among the Baltic States to raise the excise tax on tobacco to the minimum level required by the European Union and the State will earn 20 kroons of excise tax on a pack of cigarettes. Thus far consumers paid the State 14.2 kroons per pack of cigarettes and this means that the price surge will be nearly 41%. In Russia, however, the excise tax is equivalent to 1.53 Estonian kroons per pack.

According to a survey carried out by British American Tobacco, the proportion of illegal cigarettes in Estonia forms 19% of the total market volume. The problems are the greatest in the Viru region where the proportion of illegal cigarettes is 41% of the total market volume and also in Southern Estonia where the proportion of illegal cigarettes is 27%. Illegal business forms 9% in Western Estonia and in Tallinn and in the Harju, Rapla and Järva counties the share is 8%.

According to the director of corporate communications of Japan Tobacco International Ramunas Macius, 9% share of illegal business is "normal, because illegal activities cannot be entirely prevented." He noted that the State should do more in order to control the blooming illegal cigarettes business which will presumably bloom even more due to the surge in the excise tax rate. Macius stated that in Lithuania the customs authorities are able to confiscate 10% of illegal cigarettes, in Latvia the share is four% and Estonian Tax and Customs Board only manages to confiscate one% of all illegal tobacco products circulated on this market.