In December 2013, when government announced plans to increase the excise rate on tobacco by another 20 lek/for a 20-cigarette pack, imports rose by 32 percent to 567 tonnes compared to the previous month and more than doubled compared to the average monthly imports in 2013.
TIRANA, April 9 – Albania’s Competition Authority has launched a probe into the local tobacco market following allegations of abuse after the rise in cigarette prices in December 2013, just before the entry into force of new higher excise taxes.
Monitoring showed that almost all wholesale and retail companied increased cigarette prices ahead of the entry into force of the new excise tax.
The Competition Authority says the investigation will cover the January 1 to 14 period to assess if there has been any limitation, distortion or possible abuse of dominant position by market operators.
The monitoring of the market comes after public concerns over the increase in cigarette prices faster and at a bigger amount than the increase in the excise rate under the fiscal package which entered into force in January 1, 2014.
In December 2013, when government announced plans to increase the excise rate on tobacco by another 20 lek/for a 20-cigarette pack, imports rose by 32 percent to 567 tonnes compared to the previous month and more than doubled compared to the average monthly imports in 2013.
Tobacco imports in 2013 rose to around 3,700 tonnes, up 1.8 percent compared to 2012, and 13.7 percent compared to 2011, but were down by 18 percent compared to peak level of 4,500 tonnes in 2010, according to customs authorities. The downward trend in tobacco imports in a country where around 40 percent of the population smokes unveils that either smuggling has increased or Albanians have shifted into domestic hand-rolled tobacco as prices of international brands have been on a constant rise.
The turnover of the cigarette market in Albania is estimated at Euro 300 million per year, of which 70 percent goes in excise, VAT and customs duties, says the Authority.
Starting January 2014, the excise rate on tobacco rose from 70 lek for a 20-cigarette pack to 90 lek with new increases projected in the next three years. The Finance Ministry estimates that 1,000 cigarettes (50 packs) will be taxed at 4,500 lek starting January 2014, 5,000 lek in 2015, 5,550 lek in 2016 and 6,000 lek in 2017.
Cigarette prices in Albania for the most popular brands vary from 180 lek to 270 lek (Euro 1.9) per packet.
Albania has 872,000 smokers out of a population of three million, with one of Europe’s highest smoking rate. Albanians spend more than 300 million euros on tobacco products every year.
Although smoking has been banned in enclosed public spaces since May 2007, the law continues largely being ignored mainly because of lack of appropriate structures and necessary staff to supervise bars and restaurants.
Domestic/Imported tobacco
Domestically produced tobacco has sharply dropped in the past 14 years, shows a study carried out by Open Data research centre. Lack of domestic industry on cigarette manufacturing after the collapse of the communist regime in the early 1990s, failure of the agri-cultural policies and competition from imported cigarettes have led to a sharp decline of 3.7 times in the cultivation of tobacco during the 1998-2012, says Open Data research centre.
Statistics from the Agriculture Ministry show domestic tobacco production dropped from 7,400 tonnes in 1998 to 2,000 tonnes in 2012. Since 2007, when domestic tobacco cultivation reached its lowest level of only 900 tonnes, domestic production has been on an upward trend.
Because of lack of manufacturing industry, more than half of domestic tobacco is exported mainly to Kosovo.
Tobacco imports meet most of the country’s domestic demand. However, since 2008 when tobacco imports reached 4,391 tonnes, imports of cigarettes have been on a downward trend affected by higher prices and excise taxes. The share of imported cigarettes dropped to 64.8 percent in 2012 while the share of domestically produced tobacco rose to 35.2 percent, according to Open Data.
Tobacco imports in 2012 dropped to 3,689 tonnes, up from 3.277 tonnes in 2011, but down from 4,589 tonnes in 2010 and 4,391 tonnes in 2008.
Tobacco importers say there has been a shift toward hand-rolled unprocessed tobacco which is mainly sold on the black market and mostly produced in the mountain areas in the northern region of Shkodra.
