Cigarette Prices in Russia to Double Next Year—What Will It Mean for the Vaping Industry?

According to an article released by RT News last week, a document from the Ministry of Internal Affairs was disclosed by the Russian tabloid "Komsomolskaya Pravda," stating that "the current excise tax rate is 1680 rubles (27.5 USD) per thousand cigarettes, which will increase to 2123 rubles (35 USD). At that time, a pack of cigarettes may cost 220 rubles."

If this tax increase plan is approved, it will be the highest percentage increase in taxes witnessed in modern Russia. According to Alexander Liutiy, Director of Corporate Affairs at British American Tobacco Russia.

"About 60% of Russian smokers choose cheap cigarettes. Therefore, black market tobacco products are becoming the choice of consumers. This directly leads to criminal activities in the market," the document shows.

However, the prices of cigarettes in neighboring ECU (Eurasian Customs Union) countries have not increased as significantly. Liutiy believes that the increase in this tax in Russia could easily lead to an influx of tobacco products from other countries such as Belarus and Kazakhstan, where they are at least 30% cheaper.

How will this affect the vaping industry?

In Russia, e-cigarettes are not regulated as tobacco products, so we can speculate that increasing cigarette taxes could encourage many smokers to switch to safer alternatives. However, there has been talk of implementing a tax on vaping products since early 2017, and their use in public places has been banned to prevent young people from using these devices. Therefore, the future of these electronic devices in Russia remains unclear for now.