Russian Tobacco Makers Ask Putin to Keep Cigarette Prices at Low-Cost

Russia’s biggest cigarette makers this week have sent a letter to President Vladimir Putin asking him to stand against a parliamentary move to establish a minimum price on smoking products, business newspaper Vedomosti revealed Friday, citing a copy of the letter.

Despite the fact that 60 % of men and about 25 % of women in Russia light up, based on the latest World Bank records, the lower house of Russia’s parliament, the State Duma, has been working on tobacco cessation program. This summer, tobacco use in Russian cafes and restaurants was prohibited.

A bill to establish a minimum price of $1.3 per package and then increase it in accordance with inflation was transmitted to the Duma in September. This could result in a significant price increase: Based on a tobacco industry source quoted by Vedomosti, 40 % of cigarettes sold on the Russian market cost under $1, and a quarter of them are produced by Russian companies.
In their letter, four of Russia’s major cigarette makers — Donskoi Tabak, United Tobacco Factory, Usman-Tabak and the Baltic Tobacco Company — explained the new law would have a “negative impact on the local tobacco industry,” getting rid of their competitiveness when confronted with greater, multinational cigarette companies.
Vedomosti reported it was not able to validate the credibility of the letter. Kremlin representative Dmitry Peskov told that he was not aware of it.
Inexpensive, locally produced cigarettes are substantially lower in quality. At the same time, international companies control Russia’s $20 billion cigarette market, and international cigarette brands such as Lucky Strike and Parliament at present sell at prices about $1.3.
Playing on the rise of nationalism that has appeared in Russia after the annexation of Crimea from Ukraine in March, Vedomosti cited the letter as disagreeing that the bill is shortsighted and unpatriotic facing the aggressive sanctions by Western countries — where most of their competition is headquartered.
A study led by state-controlled pollster VTsIOM at the beginning of September indicated that over 70 % of Russians would prohibit imports of alcohol and cigarettes from Western countries, but few would stop buying foreign cars or pay an additional tax on vacations overseas.
The bill is now being viewed by a Duma committee and is planned to be brought to session on November 10

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