Unfortunately, your browser does not support our website's current technology. Please use Microsoft Edge, Google Chrome, Mozilla Firefox or Apple Safari.


Ви успішно зареєструвалися

AmCham Ukraine calls to stop the illegal production of tobacco products as illegal trade level reaches record high of 25.7% of total market volume

AmCham Ukraine calls to stop the illegal production of tobacco products as illegal trade level reaches record high of 25.7% of total market volume

According to the data obtained from the results of the latest KANTAR Ukraine study, in October 2023, the share of the illegal industrial cigarette market in Ukraine reached a new record high and amounted to 25.7% of the total market volume.  This growth occurred due to an increase in the share of counterfeit products and products intended for sale in the duty-free trade zone (with the inscription Duty Free) or for export and illegally sold in Ukraine. Both the share of counterfeit products (up to 11.3%) and the share of products labeled Duty Free or intended for export but illegally sold in Ukraine (up to 12.9%) increased. The average annual volume of the illegal cigarette market also set a record and reached 21.8% in 2023, compared to 19.9% in 2022.

AmCham Ukraine calls all involved law enforcement agencies and representatives of other state authorities regarding to immediately strengthen the work to identify and stop the activities of enterprises engaged in the illegal production of tobacco products and prevent the resumption of their work in the future. Special attention should be paid to the elimination of the "Duty Free scheme", the share of which, according to the study, is 72% of the shadow market and is the largest source of illegal cigarettes in Ukraine. The shadow economy, and particularly the illegal tobacco market, poses a significant threat to the country's economic security and requires urgent and coordinated actions to effectively reduce this level to at least 9% in 2024.

According to the research data, 72% of illegal tobacco products, marked Duty Free or intended for export, have an inscription stating that the producer is the Vynnyky Tobacco Factory. 62% of this group of illegal products are Compliment cigarettes labeled Duty Free. According to average annual indicators, 26% of counterfeit products have signs of counterfeit excise stamps. According to the inscription on the package, produced by "Ukrainian Tobacco Production" and United Tobacco. The leaders in terms of distribution of illegal products are 8 regions of Ukraine, where 70% of such products are sold: Dnipropetrovsk - 17%, Odesa - 12%, Lviv - 9%; Kharkiv - 9%; Khmelnytsk - 7%; Kirovohrad - 6%; Chernivtsi - 5%, Rivne - 5.

AmCham Ukraine member companies' experts have been working for a long time to draw the attention of the government and especially law enforcement agencies to the growing problem of the illegal tobacco market. The shadow market not only distorts competition and damages law-abiding businesses, but also causes significant damage to the State Budget of Ukraine. In 2023, KANTAR Ukraine experts estimated the amount of unpaid taxes to the budget of Ukraine at 23.5 billion UAH.  While there is a war going on in the country, these funds could have been used to strengthen Ukraine's defense capabilities. In addition, the business community actively communicates with the country's international partners to involve them in the fight against illegal production and distribution of excise goods.

Considering the ongoing war, insufficient filling of the State Budget, and reduction of economic and military aid from international partners, the growth of the shadow sector of the economy, according to business representatives, is unacceptable. During this year, the tobacco industry observed how various legislative initiatives appeared one after another, such as: ensuring the traceability of excise products, banning the display of legal products, state regulation of the production and circulation of excise products, another increase in excise taxes for legal products and other legislative novellas, which essentially made it more difficult for legal businesses to operate and by no means eliminated the shadow sector.

KANTAR Ukraine, in each of its reports, clearly identifies the market players who flood the market with Duty Free and counterfeit products.

Therefore, as a short summary, we can state that in 2023, the legal tobacco business did not experience an effective fight against the shadow economy in the form of the illegal tobacco market.

Official Service Providers