Tobacco Taxes Up in Russia

Cigarettes prices were raised in a lot of countries. But recently this legislation came in Russia too. The world’s third-largest cigarette maker, Japan Tobacco Inc. said that Russian tobacco sales are rising as taxes force up the prices of budget opponents to its Winston and LD brands.
In a short period of time, from January to March, cigarette volumes in Russia raised 1.5 percent, said Masakazu Shimizu, executive Vice President.
Taxes on tobacco will be up until 2011 in Russia, where 42 percent of the population smokes, according to Japan Tobacco. Japan Tobacco involved Russia in its Rest of the World unit, which accounted for 17 percent of sales last year.
Tobacco taxes raised in UK markets too. Japan Tobacco’s U.K. market share rose to 39.2 percent in April from 38 percent a year earlier, the company said.
In the north and central Europe division, which includes the U.K., Japan Tobacco increased volumes by 3 percent in the first three months of the year, adding it expects to increase sales in Europe this year too.
Shimizu said he doesn’t believe the Japanese government has any concrete plans to sell its 50 percent stake in the Tobacco Company. Japanese new legislation requires Japan Tobacco to purchase all of its tobacco leaf from local farmers for domestic production.
Japan Tobacco, which purchased Gallaher Group Plc for 7.5 billion pounds ($11.4 billion) in 2007, will not make another similar-sized purchase in the next three years.
The maker of Camel and Mild Seven cigarettes, Japan Tobacco Inc. predict that profit would fall by 19 percent in April this year, worse than analysts considered, as demand falls in Japan, the strengthening yen weighs on overseas revenue, and costs rise from higher leaf tobacco prices.
Tobacco use has contributed greatly to Russia’s demographic crisis. Although Russia’s population of 143 million is approximately half that of the United States, Russian tobacco use kills almost as many people—some 400,000 per year—as it does in the U.S.
More than 60 percent of Russian men and up to 30 percent of Russian women smoke, making Russia’s adult smoking rate roughly double that of the United States, where about 20.8 percent of adults smoke. According to Euro monitor International, Russia ranks fourth worldwide in annual per-capita consumption, with some 2,665 cigarettes smoked, behind only Serbia and Montenegro, Greece and Bulgaria.

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