The illicit cigarette trade accounted for 1.1%-1.2% of total market volumes in Ukraine in 2015, while this figure stood at 10% in 2013, according to CEO of Philip Morris Ukraine tobacco company Artem Chernis.
Such change in the market is related to the tightening of state control and efforts undertaken by market participants themselves, according to the company`s chief. The weakening of the national currency has also made illegal import of cigarettes less profitable.
Chernis noted a growth in a lower price market segment, which has resulted from reduction in the illegal cigarettes market share. The growth in the cheap cigarettes market share has been recorded for several consecutive years, despite a decline in the purchasing power.
According to Sales and Distribution Director at Philip Morris Ukraine Artem Krivtsov, low-price cigarettes in Ukraine account for about 80% of the total market. Krivtsov expects that the market growth this year will be propped up by further reduction in illegal cigarettes consumption.
”Currently I see some market growth prospects in terms of increasing total shipments and, as a result, expanding production in Ukraine. This is mostly due to the continuing effect of illegal trade substitution,” Krivtsov said.
At this, he noted that the consumption level of tobacco products has remained stable for many years.
”The number of smokers in the country among adult population stays relatively the same – about 35%, and so does the average daily consumption, which amounts to 16-16.5 cigarettes,” Krivtsov said.
As UaPosition reported earlier, the volume of cigarettes production in Ukraine totaled 92.9 billion items in 2015, which was higher by 8% than in the previous year. In 2014, production of cigarettes decreased by 0.1% as compared with 2013 and totaled 86 billion items.
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