2017 is the year of challenges in the Hungarian tobacco product market

Sales in the Hungarian tobacco product market have been increasing since the introduction of the new tobacco shop system. After the 25-percent surge at the end of 2014, sales have been growing by 4-5 percent a year, mainly due to higher product prices. As regards volume sales, the picture is less rosy: according to statistical data by the National Tax and Customs Administration (NAV), the market is in stagnation. Consumption shifted in the direction of roll-your-own (RYO) tobacco, because by buying these consumers get more cigarettes for their money. Philip Morris is the absolute market leader, followed by BAT and JTI. The biggest Hungarian-owned market player is Continental Dohányipari Zrt.

The first few months of the year brought modest sales growth for the more than 100 partners of Trafik.hu. What about the future? Manufacturers will probably be forced to raise prices – probably by 15-20 percent – as the excise duty increased last year and will rise again soon. What is more, a pack of cigarette must contain 20 cigarettes again, instead of the former 19.

The European Union’s Tobacco Products Directive’s (TPD) last deadline entered into force on 20 May. From this date products must only be marketed in a packaging with graphic and text warnings about the negative health effects of smoking. Flavoured cigarettes are now banned, with the exception of menthol. This means that there will be lots of unsold products left in tobacco shops. It isn’t known yet what will happen to these products, as about 80 percent of a product’s price is taxes and tobacco product sellers now can’t reclaim this sum. //

Zoltán Tóth
managing partner
MindZ Business Design