The European Commission’s DG TAXUD published end of July the updated releases for consumption of cigarettes and fine-cut tobacco, including 2017 figures. Sales have declined for fine-cut tobacco products by around 6%.
The reasons for this decline are manifold. It is partly due to the improving economic situation in Europe: consumers are better off resulting in them turning away from lower-priced fine-cut products. This suggests that the market is now stabilising after reaching a peak during the crisis of 2008-2014. In eastern & central Europe, fine-cut products are still niche goods representing less than 5% market share in 8 Member States. Importantly, the decline in traditional fine-cut countries is also being driven by shock tax increases. Policies enacted in France, the Netherlands and Belgium are undermining the affordability of fine-cut products for less well-of consumers, which has likely led to an increase in illegal trade.
ESTA Secretary General Peter van der Mark said: “The reality behind these numbers is that there is not one European market for fine-cut tobacco, but 28 markets, that each have their own specificities with different consumers preferences. Governments must take these specificities into account when formulating tax policy. It is demonstrated time and time again that failing to do so fuels illegal trade.”