Message from the head of BAT Adria: Regulate excise duties, Croatia loses one billion kuna annually

On the black market for cigarettes, the Croatian budget loses approximately one billion kuna annually, and one of the main reasons for the high share of illegal cigarette trade (25 percent of total tobacco trade) is the uncertainty regarding the introduction of excise duties and their levels, explained Ram Addanki, CEO of BAT Adria. As he stated during the presentation of results in the first year after the acquisition of Rovinj’s TDR, tax uncertainty is among the greatest challenges to the growth of BAT’s investment in Croatia. Therefore, BAT leaders took the opportunity to call on the government to join forces with them in combating this activity. According to them, the growth of the illegal market is favored by the unplanned increase in excise duties on tobacco products, which is why they are asking the government to precisely define the excise duty growth calendar.

Despite this, the company’s market share in the Croatian market is growing, after continuously declining since 2008 (TDR) and now reaching 52.8 percent thanks to the brands Rothmans, Lucky Strike, and Dunhill. Investments in Croatia since last autumn when BAT acquired TDR amount to 520 million euros (acquisition and investments in the facility in Kanfanar), but an additional 30 million euros is planned to be invested. Croatian consumers will, thanks to the emphasis that BAT places on the Istrian factory, be among the first in the world to have the opportunity to try the latest technology for preserving the flavor of cigarettes, TASTEloc, which has just been introduced in Kanfanar, in about two weeks. Although the mentioned facility exports 60 percent of its production, domestic tobacco producers could soon benefit from BAT’s arrival, the company announced, as their entire production could be used not only for the needs of the Croatian market but also for other production facilities in Europe.

After the successful transition of the Benston brand to Rothmans and the launch of new brands from its portfolio in the Croatian market, BAT intends to merge Ronhill with Dunhill as its market share has been declining for a long time. One of the still most popular brands will receive a new name, as well as a modified recipe that will combine what consumers loved about Ronhill with what makes Dunhill the most prestigious premium brand in the world. ‘By bringing Ronhill into the Dunhill family, we are ensuring a new future for consumers of that brand. After eight years of continuous decline, Ronhill has lost more than half of its initial market share, which clearly shows that consumers are seeking change,’ said John Brady, a member of the Management Board responsible for marketing.