“If the trend of the last year continues, the amount of 74 billion
cigarettes does not look like an unreal target,” he told reporters in
Kyiv last week.
Kyshko said that last year growth not only in the smuggling of
cigarettes, but also in the counterfeiting of cigarettes was seen on the
domestic market.
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“There has never been such a high level of counterfeit products on the cigarette market,” he said.
Imperial Tobacco Ukraine CFO Volodymyr Antypenko said that under an
order of the company, TNS Ukraine analysts conducted a study, under
which counterfeit product consumption in the country grew from 4.2% in
October 2011 to 4.4% in October 2012. In addition, according to
assessments of Imperial Tobacco Ukraine’s experts, the share of the
counterfeit products of the market came to at least 1%.
Antypenko also said that last year some players were involved in
price wars on the Ukrainian cigarette market, which were characterized
by the fall in the prices of some products by 15-20% in some regions.
The further increase in the illegal product share of the market this
year will be linked to the introduction of new excise duties and changes
in the structure of taxes from January 13, 2013, Antypenko said. He
said that the company had to increase the prices of its products from
the beginning of 2013. The prices of low-price segment cigarettes grew
by 10-15%, and the rise in the prices of the high and medium price
segments was smaller.
He said that from January 1, 2013, only Imperial Tobacco Ukraine and
Philip Morris Ukraine declared new prices of their products. He believes
that the rest of players did not increase prices thanks to the large
amount of product stocks or hoping that the law on the increase of
excise duties will be not signed by the Ukrainian president.
Commenting on the influence of the smoke ban at restaurants and bars,
which took effect on December 16, 2012 in Ukraine, Antypenko said that
the certain negative pace on the market was present, but today it’s
difficult to say how strongly the requirement impacted cigarette sales.
As reported, the Ukrainian parliament on November 20, 2012 passed law, increasing excise duties for beer, alcohol and tobacco.
The document foresees an increase in specific excise rates on
non-filter cigarettes, from Hr 49.48 per 1,000 cigarettes to Hr 72.70
per 1,000 cigarettes, and on those with filters from Hr 110.64 per
1,000 to Hr 162.60 per 1,000 cigarettes. In addition, the draft law is
to introduce an excise tax on raw tobacco at Hr 217.60 per kg, whereas
the current rate is zero.
The document assumes a reduction in ad valorem rates on non-filter
cigarettes from 20% to 12%, and on those with filters from 25% to 12%.
The document also fixes the minimum excise tax liability for the
payment of excise tax on tobacco products at Hr 95.40 per 1,000
non-filter cigarettes and Hr 217.60 per 1,000 cigarettes with filters.
From January 1, 2014, the specific excise rate on non-filter
cigarettes will be set at Hr 77.50 per 1,000 cigarettes, from January
1, 2015, at Hr 82.50 per 1,000 cigarettes, while the specific excise
rate on cigarettes with filters will be Hr 173.2 and Hr 184.50 per
1,000 cigarettes respectively.
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