UKRAINE The Lviv Tobacco Factory, whose aggressive marketing techniques have attracted criticism from global tobacco manufacturers.
High Demand Makes Ukraine Attractive to Global Tobacco Majors Prices in its local market are among the cheapest in all of Europe? By Eugene Gerden, TI Russian Correspondent lobal tobacco producers are making moves toward strengthening their positions in the Ukrainian tobacco market. They are attracted by the recent change of power in the country and the existing high demand for tobacco products among the local customers. Recent statements of producers and industry analysts suggest that in recent years, Ukraine has become one of the most attractive post-Soviet states for doing business for global tobacco majors, many of which were able to
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significantly increase their profits from the local market. Favorable legislation One of the reasons for this was the liberal anti-tobacco legislation. Although the excise tax on tobacco products has been regularly increasing in Ukraine since 2008, at present, prices in its local market are among the cheapest in the whole Europe. According to Konstantin Krasovsky, head of the department of tobacco control of the Ukrainian Ministry of
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Health, global tobacco producers have perfectly adapted to the realities of doing business in Ukrainian, implementing their pricing policies. “This is mainly reflected by the gradual increase of prices for their products,” he says. “The companies simply calculated that an immediate increase of prices might force local customers to consider stop smoking. However, in the case of gradual increases, the growth of a final price may go unnoticed by the majority of customers.” Decline in smokers The last year when a package of anti-tobacco laws was approved in Ukraine was 2012. At that time, the local parliament (Vekrkhovhnay Rada) imposed a ban on the advertising of cigarettes in the country. In addition, it decided to prohibit smoking in restaurants, and it obliged producers to place health warn-
