The growing interest of Russian consumers in aromatic cigarettes, cigarillos and vapes contributed to an increase in tobacco imports in the second quarter by 43.3% year-on-year. The bulk of foreign cigarettes to Russia are now imported from Belarus and the UAE, and vapes from China, according to market participants. But in the near future, the dynamics may be adjusted due to the introduction of a new excise tax administration system.
Imports of tobacco products to Russia in the second quarter increased by 43.3% year-on-year, to 113.2 million packages, according to the CRPT (operator of the Honest Mark label). In the first half of the year, the figure reached 215.5 million packages, an increase of 35.1%. Importing countries are not disclosed in the CRPT. The interlocutor of Kommersant in the tobacco market noticed an increase in the volume of both cigarette supplies from abroad, the main volume, according to him, is formed by Belarus and the UAE, where production is cheaper due to the difference in taxes. JTI Russia and the International Tobacco Group declined to comment, and a representative of Philip Morris International did not promptly respond to Kommersant.
The main volume of tobacco imports in physical terms, according to the CRPT, is formed by cigarettes.
In the second quarter, shipments reached 93.3 million packages, an increase of 27.3% year-on-year. In the case of cigarillos, the increase was 6.6 times, up to 12.4 million. Total sales of cigarettes to consumers increased by 8.3% year—on—year, cigarillos - by 15.8%, although Rosstat previously indicated a decrease in Russian cigarette production in January-June by 4.7% year-on-year, to 98.4 billion units.
Maxim Korolev, head of the Russian Tobacco agency, warns that the dynamics over several quarters may be inconsistent: tobacco imports are uneven due to a long cycle. Although the expert also sees market prerequisites for its growth. The key point, Mr. Korolev calls the increasing demand for premium aromatic cigarettes in brown paper. They are represented, for example, by products from Germany and South Korea, as well as numerous foreign manufacturers, he adds.
The interest in aromatic cigarettes and cigarillos, according to Maxim Korolev, may be partly due to last year's restrictions on electronic nicotine delivery systems (ESDS), in particular the ban on the free display of products.
"This led to the closure of vape shops and could encourage consumers to switch to aromatic cigarettes in traditional retail," he argues. The expert considers the growth of the purchasing power of individual groups to be the second factor.
According to the CRPT, the import of liquids for ESDN in the second quarter of 2024 almost doubled year-on-year, to 3.2 million conditional packages. Lev Grigoriev, President of the Professional Alliance of Participants in the Russian market of electronic nicotine systems, says that foreign products, mainly from China, are represented in the category of disposable devices, forming up to 60% of this market. The expert attributes the increase in supplies both to legalization and to the general increase in consumption of alternative products to cigarettes. Liquids in vials, which form about 40% of the ESDN market, according to Mr. Grigoriev, are produced mainly in Russia.
The government will ban the addition of flavorings to liquids for disposable e-cigarettes.
The availability of ESDS is growing: the average retail cost of liquids, according to the CRPT, decreased by 51.6% over the year, to 1 thousand rubles per unit. Cigarettes rose in price by 7.3%, to 177 rubles per pack, cigarillos — by 9.9%, to 277 rubles, heated tobacco — by 5.8%, to 183 rubles.
Maxim Korolev suggests that the introduction of the "Digital Excise" system from July 1 (assumes that codes for tobacco producers and importers will be issued after verification by the labeling system of information from the Federal Tax Service and the Federal Customs Service on the availability of cash collateral, bank guarantees) may lead to a reduction in imports during the transition period. But it will last two to three months, and subsequently volumes will recover while maintaining the factors contributing to growth, the expert believes.
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