Business news from Ukraine

SHARE OF ILLEGAL TOBACCO PRODUCTS IN UKRAINE UP IN FEB-MAY

The share of illegal tobacco products on the Ukrainian market in February-May 2021 increased by 3.1 p.p., to 15.9%, this is the maximum indicator, mainly due to the growth of illegal sales of products labeled as Duty Free, as well as those intended for export.
Such data were published by the Kantar Ukraine research institute through a survey of 3,300 adult smokers throughout the country, as well as by studying the origin of tobacco products in circulation.
According to the study, the total volume of illegally sold cigarettes since the beginning of the year, including May, amounted to 7.21 billion pieces, which led to a shortfall in the state budget of UAH 13.2 billion in tax deductions.
Kantar clarified that in May 2021 the share of counterfeit products on the Ukrainian cigarette market increased by 1.8 p.p. compared to February – up to 4.2%, the share of products labeled for Duty Free and export illegally sold in the country – by 1.3 p.p., to 8.2%, while the share of smuggled cigarettes decreased by 0.1 p.p., to 1.6%.
According to the results of the study, the average annual level of illegal sales of tobacco products in January-May 2021 increased by 2.1 times compared with the indicator for the entire 2020 – up to 14.4%. At the same time, since the beginning of this year, the share of counterfeits in the domestic cigarette market has grown by 3.1 p.p. compared to the data for 2020 – up to 5.1%, the share of products marked for Duty Free and export illegally sold in Ukraine – by 4.8 p.p., to 7.6%, while the share of smuggled cigarettes decreased by 0.5 p.p., to 1.7%.
“In addition to another growth in the volume of illegal tobacco products, another feature of 2021 is that there is a change in the distribution channels for illegal products. In 2021, three times more illegal tobacco products were sold through kiosks and stores than in 2020,” analyst from Kantar Ukraine Tetiana Sverdlyk said.
The institute clarified that 62% of tobacco products illegally sold as export or Duty Free products are marked as produced by the Vynnyky Tobacco Factory (Vynnyky, Lviv region) and are marked as not intended for sale in Ukraine. The share of unidentified manufacturers is 20%, United Tobacco LLC (Zhovti Vody, Dnipropetrovsk region) – 15%.
The most common brands of this group of illegal products are the Compliment brand marked as Duty Free – with a share of 47%, as well as those intended for export, but sold in Ukraine, namely Marshall (13%), Marvel (10%), Urta (8%) and Jin Ling (6%). The total share of these brands in this product group was 84%.
Kantar noted that 49% of smuggled cigarettes are products of Grodno Tobacco Factory (Belarus), 15% are from Moldovan factories. The most common smuggled brands are Credo, Fest, Queen, Dove, NZ, Ritm.
It is specified that 63% of illegal products are distributed in seven regions of Ukraine, most of all – in Odesa and Kharkiv (13% each), Donetsk (10%), Dnipropetrovsk (8%), Zaporizhia, Khmelnytsky and Lviv (6% each) regions.

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SHARE OF ILLEGAL CIGARETTES IN UKRAINE REACHES MAXIMUM 12.8%

The share of illegal tobacco products in the Ukrainian market in February 2021 amounted to 12.8% versus 5.8% in February 2020, the figure is the highest since 2011 and is mainly due to the growth of illegal sales of cigarettes and Duty Free products intended for export.
Such data were published by the research institute Kantar Ukraine by order of the ten largest Ukrainian manufacturers of tobacco products.
According to researchers, 62% of illegally sold tobacco products in the country have a mark of production at Vynnyky Tobacco Factory (Vynnyky, Lviv region) and are labeled as export or Duty Free products not intended for sale in Ukraine. The share of unidentified manufacturers is 23%, and United Tobaco LLC (Zhovti Vody, Dnipropetrovsk region) – 15%.
The most common brands of this group of illegal products are the Compliment brand marked as Duty Free – with a share of 50%, as well as those intended for export, but sold in Ukraine, Marshall (14%), Jin Ling (9%), Marvel and Urta (6% each). The total share of the named brands in this product group is 84%.
Kantar noted that 42% of smuggled cigarettes are products of Grodno Tobacco Factory (Belarus), and 20% are products of Moldovan factories. The most common smuggled brands are Credo, Queen, Ritm, Oris, NZ and Armeyskiye (Moldova).
The study showed that 63% of illegal products are distributed in six regions of Ukraine. Most of all – in Kharkiv (14%), Donetsk and Odesa (13%), Dnipropetrovsk (9%), Mykolaiv (7%) and Khmelnytsky (6%) regions.
According to Kantar, the share of illegal products sold through legal trade channels continues to grow: in February 2021, some 36% of illegal products were distributed through stalls, 29% – shops, 23% – open markets, and 9% – street trading.
Researchers estimated state budget’s losses from unpaid taxes at UAH 11.8 billion over 2021.