Brussels, August 2025 – ESTA announces the publication of a comprehensive study on the consumption of fine-cut tobacco (FCT) across key European markets commissioned from London Economics. The analysis underscores FCT’s essential “buffer function” – its ability to help retain consumers within the regulated domestic market when consumers of factory-made cigarette (FMC) are outpriced.

The study allows policymakers across Europe better decision-making based on data and correct economic analysis when considering the development of legislation.

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Yesterday, the European Commission adopted not only the first part of the so-called Multiannual Financial Framework, but also agreed on a proposal for a revised Tobacco Excise Directive.

The Tobacco Excise Directive proposal demonstrates a total lack of understanding of the economics of tobacco taxation and breaks with the EU’s 50-year framework, which has historically ensured stable government revenues, a proper functioning of the internal market, and allowed Member States to achieve their health objectives.

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Today the Court of Justice of the European Union (CJEU) delivered its judgment (English version here) in Case 160/20 “Stichting Rookpreventie Jeugd and Others”. The Court ruled that the 2014 Tobacco Products Directive legally and justifiably used Methods and Norms of the International Standardisation Organisation (ISO) to measure emission levels for cigarettes.

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After Peterson of Dublin closed its doors in 2018, another small pipe tobacco company ceases manufacturing. Planta Tobacco Company from Berlin closed its doors due to the significant costs resulting from the EU Tobacco Products Directive adopted in 2014 and the subsequent EU regulations.

When proposing the EU Tobacco Products Directive, the European Commission admitted that smaller and mid-sized companies would be impacted much more than large multinational cigarette manufacturers, but from its point of view that was a price worth paying. However, few real impacts were calculated and, in the cases, where they were, they hugely underestimated the real compliance costs.

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The Belgium government reported yesterday an increase of 123,8 million euros of excise receipts from tobacco, which amount to 2,373 billion euros in 2018. This increase is partly due to higher prices in neighbouring countries, such as France where cigarettes packs increased by around 1 euro.

This increase of government revenues follows difficult years for the Belgium government, which recently suffered from severe fiscal shortfalls due to poorly-conceived tax policy on fine-cut tobacco. As demonstrated in the 2018 London Economics Study, Belgium has implemented sharp increases in tobacco excise duties (up to 17-19% in 2016-2017) since 2013, which heavily impacted domestic duty-paid sales and significantly reduced taxation receipts. In 2016 excise duties were increased to raise revenues, but there was a fiscal shortfall of almost 5% (€3.087 billion instead of the expected €3.238 billion). By 2017, tobacco duties had further declined to €3.004 billion, thereby exacerbating the fiscal shortfall.

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