Russia’s Oldest Tobacco Factory to Shut Down – Will the E-Cigarette Market Rise?

On November 29, Russia's oldest tobacco factory, "Balkan Star," announced that due to the continuous decline of the Russian tobacco market, this factory, established in 1850, will cease production starting in 2017.

The "Balkan Star" tobacco factory, located in Yaroslavl, northeast of Moscow, is known for producing local Russian cigarette brands such as "Balkan Star," "Golden Ring," and "Maxim." In 2008, it was acquired by the British tobacco group Imperial Brands and became the "Imperial Brands Yaroslavl Tobacco Factory."

In its statement, the factory noted that the ongoing decline of the Russian tobacco market is due to strict tobacco regulations, increased tobacco taxes, and economic difficulties, leading Imperial Brands to decide to close the "Imperial Brands Yaroslavl Tobacco Factory" starting in 2017.

The factory's general manager, Gatlov, told the media that the domestic smoking bans and regulations such as "prohibiting the production of packs containing more than 20 cigarettes" have significantly impacted tobacco companies, with the factory's capacity utilization rate remaining at 40% for a long time. To ensure the future commercial operation of the company, ceasing production is "inevitable."

Since 2013, Russia has implemented strict smoking bans for two consecutive years, prohibiting smoking in all public dining places, educational and cultural institutions, hospitals, public transport hubs, office buildings, residential stairwells, and long-distance passenger train carriages. Tobacco companies are also banned from sponsoring public events or sports competitions for commercial promotion, and shopping malls are prohibited from setting up dedicated cigarette counters. A survey released by the All-Russian Public Opinion Research Center in May this year showed that the proportion of smokers in Russia has been declining in recent years, but 31% of the population still smokes.