Germany Case Study

Germany has successfully maintained low non-domestic tobacco consumption by maintaining a clear price gap between factory-made cigarettes (FMC) and fine-cut tobacco (FCT) through moderate and predictable tax increases. This approach allowed FCT to serve as a buffer, preventing consumers from turning to cheaper non-domestic products. As a result, while overall domestic tobacco use has declined, tax revenues have remained stable. Germany’s strategy shows that it is possible to reduce tobacco consumption while limiting non-domestic market growth and sustaining government revenue.