Business news from Ukraine

SHARE OF TEDIS UKRAINE IN CIGARETTE DISTRIBUTION MARKET DOWN BELOW 75% AGAINST 99% IN 2019

The share of Tedis Ukraine in the cigarette distribution market in 2019 was less than 75% against 99% in 2013-2015, Olha Pischanska, the head of the Antimonopoly Committee of Ukraine (AMC), has said.

“According to our data, during 2018-2019, the share of Tedis in the cigarette distribution market decreased by some percentage. So, if during 2013-2015 it was 99%, then according to the results of 2019 it did not reach 75%. If to talk about specific figures for today, it is necessary to conduct a separate study,” she said in an interview with the Interfax-Ukraine agency.

Pischanska said that in addition to Tedis, other companies buy cigarettes from manufacturers, which did not happen at the time of the AMC’s decision in 2016.

“In order to demonopolize the market, at the end of 2019, recommendations of the AMC were provided to the largest manufacturers of tobacco products, and a working group was created on the basis of the Ministry of Economy, in which we take part,” she noted.

Pischanska also said that the AMC, in response to statements by tobacco companies about the possibility of filing a claim in international arbitration, created a working group and assesses the risks of the arbitration process.

In addition, asked about the position of the committee on the implementation of the pilot project National Tobacco Operator, Pischanska noted that the AMC does not yet have an official text of this document.

“Since today we do not have an official text of this document, the AMC is not able to form a position on the compliance of the project with competition legislation,” she said, adding that any model has the right to exist if it acts in accordance with the law.

CIGARETTE MARKET IN UKRAINE FALLS BY 15% IN 2019 – OPINION

Ukraine produced 51 billion cigarettes in 2019, which is 15% less than in 2018, Country General Manager of Imperial Tobacco in Ukraine Rastislav Cernak has said.

“Compared to European countries, the decline in the volume of the cigarette market was indeed proceeding rapidly. According to our data, the market dropped by 15% compared to the previous year. In 2011-2017, the decline was less than what we observed in 2019,” he said in an interview with Interfax-Ukraine.

There are several objective reasons for the fall of the Ukrainian market, according to Cernak, including an increase in excise duty.

“In 2018, the excise tax on cigarettes increased 30%, in 2019 we had two increases – in January by 20%, and in July, by an additional 9%. A significant increase in excise tax led to an increase in the price of a pack of cigarettes, which caused growth in illegal trade,” he said.

The general manager of Imperial Tobacco in Ukraine said that over the past few years, the level of illegal trade has doubled. According to TNS Kantar research, in 2019, the level of illegal trade reached 7%. The upward trend has been observed since 2017.

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PHILIP MORRIS INTERNATIONAL REDUCES CIGARETTE SHIPMENTS IN UKRAINE BY 8.8% IN 2018

Philip Morris International Inc. (PMI) Tobacco Company in 2018 reduced cigarette shipments in Ukraine by 8.8% from due to a decline in the overall market, which was partially offset by an increase in the total market share of heated tobacco products. The total volume of the cigarette market in Ukraine in 2018 decreased by 8.1% mainly due to an impact of rising prices and an increase in illegal trade, PMI said in an annual report. According to the company, the total volume of the cigarette market in Ukraine decreased by 8.7% in the fourth quarter of 2018 alone. Shipments of PMI cigarettes in October-December decreased by 10.4%.
Philip Morris International is one of the world’s largest manufacturers of tobacco products. It produces cigarettes in more than 50 factories, sells them in 180 countries.
In Ukraine, it has been working for more than 20 years. Its production facilities are based in Kharkiv region.

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TOTAL VOLUME OF CIGARETTE MARKET IN UKRAINE NARROWS BY 11-12% IN JAN-JUNE

The total volume of the cigarette market in Ukraine in January-June 2018 narrowed by 11-12% year-over-year, JTI Ukraine General Manager Paul Holloway has said. “The Ukrainian market has decreased by 11-12% compared to 2017. If in 2016, price wars were observed in Ukraine, then in 2017 the industry left them, and now the situation in this sense is more or less stable. But there is a question of purchasing power of a Ukrainian consumer,” he said in an interview with Interfax-Ukraine.
Holloway said that now the Ukrainian consumer spends on average 21% of his daily income on cigarettes. “For comparison: this is more than in the U.K., where the consumer spends on them 15% of his income,” the general manager said.
According to JTI Ukraine estimates, the share of the premium segment in Ukraine is 13%, and more than 70% of the Ukrainian cigarette market is the low-price segment, which reflects the purchasing power of consumers.
“At the same time, Winston is the fastest-growing brand on the market. It does not belong to the low-price segment. Despite the fact that the low-price segment dominates on the market, there is still room for growth in the high-price segment. We do not expect the ratio of the low-price segment to other segments to change over the next two to three years,” Holloway said. According to him, now the company is actively discussing plans to bring brands to the Ukrainian market in the segment of electronic cigarettes and tobacco heating systems.

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SUPREME COURT CONFIRMS UAH 431 MLN FINE IMPOSED ON LARGEST CIGARETTE DISTRIBUTOR TEDIS

The Supreme Court of Ukraine has confirmed the necessity of paying a UAH 431 million fine by the largest cigarette distributor Tedis Ukraine (earlier Megapolis-Ukraine) imposed by the Antimonopoly Committee of Ukraine, Committee Head Yuriy Terentiev has said.
“The Supreme Court has decided in favor of the Antimonopoly Committee in a long lawsuit concerning Tedis, the distributor of cigarettes. The decision of the committee dated December 16, 2016 was retained with the exception of a little clarification regarding the way of fulfilling the obligation to establish a transparent pricing mechanism,” he wrote on his Facebook page on Tuesday.
As reported, the committee at the end of 2016 imposed a fine of UAH 431 million on Tedis Ukraine for abuse of the monopoly position on the market, but the company appealed against this decision in court.

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