The FINANCIAL — Despite the gradual increase of tax on tobacco in Georgia which has contributed to a price increase, tobacco importers ended the first seven months of 2016 with over 16% growth. Ukraine, followed by Russia, are the top cigarette exporters to Georgia. With USD 1.31 per pack of Marlboro, Georgia is the tenth cheapest country by cost of cigarettes globally.
According to the National Statistics Office of Georgia, the total number of imported cigarettes in Georgia during January-July 2016 totalled 4,514,328,000 cigarettes, worth USD 55,251,000. The number was 3,806,318,000, or USD 51,789,300, during the same period of the prior year. With 28,227,900,000 (USD 28,227,900) Ukraine is the top cigarette exporter to Georgia. It is followed by Russia with 1,125,890,000 cigarettes, worth USD 19,232,400. The top third exporter is Belarus, with 228,810,000 (USD 1,977,200); and Armenia – 118,888,000 (USD 1,143,600).
Contrary to increased import, the number of cigarettes exported from Georgia has decreased in 2016. Exported cigarettes totalled 375,226,000 (or USD 5,055,000) during January-July 2016, down from 410,555,000 (or USD 3,950,200) from January-July 2015. With 136,410,000 cigarettes, worth USD 2,814,800, Singapore has been the top export destination for Georgian cigarette exporters this year. It has been followed by Iran – 57,611,000 cigarettes (USD 353,100). Last year the top destination of cigarette export from Georgia was Belarus. Export amounted to 319,877,000 (or USD 2,765,900) during January-July 2015. The number of cigarettes exported to Belarus stood at zero this year.
With 3,508,576,000 cigarettes (USD 44,113,100) Winston has been the top imported cigarette brand out of the total 7,968,512,300 cigarettes costing USD 103,195,600 imported in Georgia during 2015. Winston was followed by: Pall Mall – 526,650,000 (USD 5,771,300); Kent – 314,100,000 (USD 4,437,400); L&M – 279,160,000 (USD 3,144,800); Marlboro – 265,457,000 (USD 3,094,500); Camel – 206,370,000 (USD 2,996,300); Parliament – 189,970,000 (USD 2,424,900); Magna – 185,640,000 (USD 1,837,400); Gauloises – 93,450,000 (USD 1,369,700); Lucky Strike – 40,000,000 (USD 528,900); Davidoff – 27,900,000 (USD 885,000); and West – 3,760,000 (USD 38,100).
According to numbeo.com, the world’s largest database of user-contributed data about cities and countries worldwide, the cost per pack of Marlboro in Georgia is one of the cheapest out of the total 124 countries worldwide. The cheapest country is Nigeria where a pack of Marlboro can be purchased for USD 0.63. It is followed by Kazakhstan – USD 0.88; Ukraine – USD 0.99; Moldova – USD 1.01; Vietnam – USD 1.10; Armenia – USD 1.16; Belarus – USD 1.20; Pakistan – USD 1.24; the Philippines – USD 1.29; and Georgia – USD 1.31.
A pack of Marlboro will set a Georgian smoker back by more than 15 times that amount in Australia, where they cost USD 19.08, the most expensive place to purchase cigarettes. Overall, cigarettes tend to be more expensive in Europe and North America. The average reported cost of a pack of Marlboro in the United States is USD 6.50.
New Zealand is the second most expensive country for smokers. A pack of Marlboro there is worth USD 16.09. The island nation is followed by: Norway – USD 12.54; Bermuda – USD 12.00; the UK – USD 11.75; Ireland – USD 11.29; Iceland – USD 11.14; Singapore – USD 9.61; Canada – USD 9.29; and the Bahamas – USD 9.00.
The price of tobacco products in Georgia has been rising recently as a result of several factors. One wave of price increase occurred in 2013 when there was an increase in excise levies. The process continued during 2014, influenced by the excise rise in 2013 and by the rate of inflation. However, the impact on consumption of tobacco products was insignificant during 2014. The further rise in excise occurred in 2015, due to which tobacco products became more expensive in 2016.
“Georgian consumers remain conservative in terms of smoking, with the majority staying loyal to traditional cigarettes,” says the latest report of Euromonitor, regarding tobacco in Georgia. Conservatism towards smoking contributes to the low demand for cigarette alternatives, the report concludes. “It is difficult for providers of cigars and smoking tobacco to build a large audience due to low product awareness and high prices. As a result, competition in these categories is intensifying and prices are on the decline.”
As the authors of the research said, “domestic manufacturers in Georgia continued to struggle due to low demand for locally-produced tobacco products. As a result of equalisation of excise duties between domestic and imported products, local companies are unable to benefit from offering lower prices. Moreover, Georgian consumers are actively switching to imported products attracted by their better quality and global brand appeal.”
Traditional grocery retailers remain the main channel through which tobacco products are purchased in Georgia. “Rapid growth of tobacco specialists’ retailer chains has had a positive impact on the category, especially on cigars and smoking tobacco, which are difficult to find via other channels. Since the introduction of restrictions on tobacco advertisement, companies and distributors have tended to strengthen ties with retailers to improve their display advertisements. This method is one of the most popular and effective among Georgian companies.”
As the report says, Georgia is increasingly seeing a decline in the number of smokers. “Thanks to the legislative harmonisation process with the EU, the Georgian Government is introducing new regulations on tobacco products on a regular basis. This complex approach includes increasing duties, limiting advertisement and distribution of products. Anti-smoking campaigns have not had a significant impact and the overall education levels on the harmfulness of smoking are rising, encouraging many tobacco consumers to quit smoking.”
“Moreover, rising product prices will make smoking unaffordable to a large percentage of the population due to low income levels. Given these circumstances, some smokers are likely to stop consuming the product while others will simply reduce their smoking frequency.”