Due to the increase in excise tax rates on nicotine liquids in 2024, their prices increased significantly, which led to a drop in sales of electronic cigarettes in federal networks. Buyers began to purchase them in vape shops or tobacco shops, which can work with illegal products and therefore sell them cheaper. Another part of consumers began to return to traditional cigarettes, tobacco heating systems and switch to hookahs.
Sales of disposable electronic cigarettes in grocery chains in January—June 2024 decreased in physical terms by 4% year—on-year against the background of growth in other categories of tobacco products, while in monetary terms they increased by 25%, according to NielsenIQ data provided to Kommersant. There has been a slight decline in sales of liquids for electronic nicotine delivery systems, Kirill Kuznetsov, Director of Government Relations at ITMS Group (formerly the Russian division of British American Tobacco), confirms. He attributes this to the increase in the cost of legal products due to the doubling of the excise tax rate on liquids for them from 2024.
Since January 2024, the excise tax rates for this category have increased from 20 to 42 rubles per milliliter. For example, the Tabachka na Raion chain of stores told Kommersant that prices for electronic cigarettes and vaping liquids increased by 30% year-on-year in the first half of the year, as a result of which sales of this category decreased by 10% in physical terms and increased by 17-18% in monetary terms.
According to Kirill Kuznetsov, some consumers have shifted to cheap illegal products. Lev Grigoriev, President of the Professional Alliance of Participants in the Russian Market of Electronic Nicotine Systems, cites research data from the National Scientific Competence Center, according to which in December 2023 the share of the illegal vaping market was 68.3%. According to him, NielsenIQ data reflect the sales of federal retail chains operating legally and making up a small part of the market. But e—cigarettes are sold mainly through specialized channels - vape shops and tobacco shops, adds Mr. Grigoriev.
There are also consumers who have returned from vaping to cigarettes and heated tobacco, Kirill Kuznetsov notes. The Tabachka na Raion network, in turn, notes an increase in demand for hookah products against the background of rising prices for electronic cigarettes.
According to NielsenIQ estimates, sales of traditional cigarettes and tobacco heating devices increased by 3% in units, and sticks to the latter by 5%. But these categories have gained more modestly in money than e—cigarettes - 9-11%. Excise tax rates on cigarettes and sticks were indexed in the first half of 2024 adequately to the level of inflation, explains Mr. Kuznetsov. Philip Morris did not respond to Kommersant's request, and JTI did not disclose sales figures.
In Perekrestok stores, the demand for tobacco in pieces has not changed in general, but sticks within the category increased by 6%, a representative of X5, which includes the chain, told Kommersant. Magnit and Azbuka Vkusa declined to comment.
Romir analysts, in turn, found out that in the first half of 2024, the share of consumers who reduced spending on tobacco heating systems turned out to be higher than those who increased such costs. The growth rate of sales of tobacco heating systems may slow down against the background of market saturation, explains Maxim Korolev, head of the Russian Tobacco agency. The majority of consumers who wanted to switch from cigarettes to heated tobacco, considering this category less dangerous to health, did so in previous years, he points out.
The supply of such devices has also decreased. At the end of 2023, retail sales of JTI's Ploom devices stopped due to "significant disruptions in global supply chains," the company said. But, according to Maxim Korolev, Ploom took an insignificant share in sales.
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