Tomašković: EU Excise Tax Policy Will Erase Cheap Cigarette Brands

Despite an eight percent decline in the overall tobacco market and a price increase of 20 to 30 percent for cigarettes, the Tobacco Factory Rovinj (TDR) remains a leader in Croatia and the region, company representatives stated at a press conference.

-TDR has lost 5.7 percent of its market share in the past year, after which it stabilized its share. It has undertaken a series of actions to mitigate the impact, launching nine new products last year, three limited editions, and achieving sales of over 12.5 billion cigarettes and revenue of 231 million euros – emphasized CEO Davor Tomašković, adding that more than 6.6 billion cigarettes were also exported to foreign markets. Tomašković specifically addressed last year’s market changes that marked the Croatian tobacco industry. The market was most affected by changes in excise tax regulations, says the CEO, restrictions on smoking in public places, the economic crisis, and market obscuration, i.e., advertising bans. He added that all these changes have contributed to an increase in illegal trade and cross-border purchases, an increase in retail cigarettes, a reduction in the size of the regular market, and a decline in trade revenue.

-The most important direct consequence is that the state budget has not been filled – he emphasized, also highlighting the category of cut tobacco for which lower excise taxes are paid, noting that the growth of this category cost the state ten million euros in 2009. -If the EU guidelines on the new excise tax policy, which drastically increase and equalize the tax burdens on all cigarettes, continue to be accepted unconditionally and without a transitional period, cheap brands will disappear, thereby endangering the most socially vulnerable group of consumers – warned Tomašković. Regarding future plans, TDR signed a contract a month ago for the construction of a factory in Iran, an investment worth 30 million euros, which is expected to start operations by the end of next year. Additionally, it is launching new products and packaging that make a step forward in environmental protection. (Jasmina Trstenjak)