A number of major tobacco companies have announced the suspension of investments or activities in Russia over the past month. So, at the end of February, Philip Morris International (produces Marlboro, L&M, Bond Street, Parliament and others cigarettes) announced a reduction in production in Russia, suspension of investments. And on March 24, the company announced that it was allowing the restructuring of the Russian business, including the possible transfer of assets.
On March 9, Imperial Brands (Davidoff, West, Jadé, P&S, Maxim, myblu) announced the suspension of production, termination of sales and marketing activities. Japan Tobacco International (Winston, Camel, Sobranie, LD, "Russian Style", "Peter I", "Troika") announced the suspension of investments and marketing activities in Russia. British American Tobacco (Kent, Rothmans, Vogue, Dunhill, Pall Mall, Lucky Strike, Java Zolotaya) also announced its withdrawal from the Russian market. According to Kommersant, the company will transfer the management of the Russian business to a local company.
The companies explain their decisions primarily by logistical difficulties against the background of sanctions against Russia - transport companies refuse to carry cargo to Russia. We are not talking about stopping the Russian factories owned by them, as well as about the dismissal of employees, in most cases. Only Imperial Brands announced the suspension of production at the factory in Volgograd. However, the company promised to pay salaries to employees during the suspension of business, Interfax wrote with link to the company's message.
The Ministry of Agriculture "RG" said that currently all enterprises for the production of tobacco products are operating normally. There is no shortage of products in the country.
According to the medical journal The Lancet, Russia is among the five most smoking countries after China, India, Indonesia and the USA. Despite the continued decline in sales, 193.2 billion cigarettes were sold in Russia in 2020, and sales increased by 2.8% in the first half of last year, according to data from the Accounting Chamber. At the same time, almost all tobacco production is concentrated in the hands of foreign companies.
All tobacco and almost all materials for the production of cigarettes are imported. And it is still not clear how soon and whether it is possible in principle to replace imports. For example, aluminum foil on a paper basis from one of the Russian companies after several years of quality improvement has become widely used by many factories in the Russian Federation.
But the polypropylene film of domestic production has not reached the required level in key parameters, and none of the tobacco manufacturers buys it, said Maxim Korolev, chief editing officer of the Russian Tobacco news agency. Factories also use domestic corrugated cardboard for master cases (standard boxes for 500 packs or 50 blocks) and we do not make coated cardboard for the packs themselves. According to Korolev, rapid import substitution should not be counted on. But there is hope for replacing the sources of materials and tobacco with countries that are more friendly to Russia.
Pavel Shapkin, Chairman of the National Union for Consumer Rights Protection, recalls how in the 90s of the last century, 26 out of 28 tobacco factories stopped in the country at the same time. After that, multinational companies gradually began to buy Russian tobacco factories. Then, because of nicotine hunger, smokers in different regions made tobacco riots, blocking highways and stopping public transport. It was impossible to buy cigarettes even by cards. And at the Riga market in Moscow they sold cans with cigarette butts: 3 liters of selected cigarette butts - for 3 rubles, 1 liter - 1 ruble. It won't come to that now, of course. Tobacco factories probably have a stock of raw materials, and if necessary, it can be produced "anywhere," Shapkin believes. Even if we are talking about stopping factories, cigarettes will be brought, for example, through Kazakhstan, although this will lead to an increase in the price of tobacco products. Or the market will be even more filled with counterfeit goods.
But it is more likely that tobacco companies will simply give the business to affiliated structures and continue to work as if nothing had happened. None of the multinational companies will want to lose such a huge market as Russia. In addition, the government has already supported the idea of nationalizing the assets of companies that have stopped working in Russia, the expert warns.
Source:
rg.ru