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International Internet Magazine. Baltic States news & analytics Monday, 22.04.2024, 02:06

Market share of illicit cigarettes lowest in decade in Estonia

BC, Tallinn, 03.07.2020.Print version
A study by the Estonian Institute of Economic Research (EKI) shows that illegal cigarettes accounted for 12-15% of the total volume of the domestic cigarette market in 2019, marking the lowest level in the past 10 years, cites LETA/BNS.

In 2018, illegal cigarettes accounted for 16-20% of the total domestic cigarette market volume, while the figure was 20-24% in 2017, and 18-21% in 2016.

The study by EKI shows that due to illicit cigarette trade, the state's loss in tax revenue totaled 30.4 million euros from excise duty on tobacco and 11.2 million euros from value-added tax.

Unpaid taxes to the state thus altogether amounted to approximately 41.6 million euros. The corresponding figure in 2018 was 53.7 million euros.

The survey results indicate that 85% of cigarette smokers only bought legal cigarettes in 2019. 14% of cigarette smokers meanwhile bought illicit cigarettes -- 3% did so often, 4% occasionally, and 7% very rarely. 

Compared with 2018, the share of those who bough illegal cigarettes often or occasionally declined whereas the share of those who did so rarely increased in 2019, which is indicative of intentional consumption of illegal cigarettes being replaced with unsystematic consumption.

The main reason why people bought illicit cigarettes was the cheaper price thereof compared with legal cigarettes. The lower price was deemed a very important factor by 97% of respondents who consumed illicit cigarettes and somewhat important by 3%.

The easy availability was the second reason why people opted for illicit cigarettes as this aspect was deemed important by important by 17% and somewhat important by 24% of illegal cigarette smokers.

The prices of legal cigarettes increased close to 8% on year in 2019, bringing the average price of a pack of cigarettes to 4.07 euros. The corresponding price in 2018 was 3.78 euros.  The price of illicit cigarettes meanwhile grew from 1.92 euros in 2016 to 2.68 euros in 2018 and declined again 14% on year in 2019 to 2.31 euros, likely due to lower demand. As a result of increases in the price of legal cigarettes and lower price of illicit cigarettes, the price difference has increased from 29% in 2018 to 43% in 2019.

Some 220 million illicit cigarettes worth 25.4 million euros were sold in Estonia in 2019. The figures have decreased notably compared with 2018 when the total value of the 300 million illicit cigarettes sold in Estonia amounted to 40.3 million euros.

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