what will we drink
The head of the Russian Smoking Union, Andrey Loskutov, says Russians should not fear cigarettes disappearing from shelves.
“Nobody’s leaving. British American Tobacco, Phillip Morris, Imperial Tobacco, Japan Tobacco continue to operate in Russia. They won’t leave.”
Loskutov spoke in an interview with socialbites.ca. He did not rule out that tobacco giants could change familiar cigarette brand names to bypass sanctions.
“Of course there will be changes. In which brands it will happen depends on the current situation. There has been no change so far. It all depends on the supply of certain tobaccos. If Russia cannot import some tobacco, brands will shift,” he said.
He noted established delivery routes—there was a European hub that supplied Russia with tobacco. It remains unclear whether a new logistics center will be created.
Pavel Shapkin, head of the National Union for Consumer Protection, believes that all four foreign tobacco giants will either sell their products to Russian businesses or return to the market under altered local brands.
“Capacities and brands of outgoing products will be acquired. Regular cigarette brands will stay. There is a sizable stock in warehouses of products from the companies that left. It will be enough for a long period,” Shapkin explained.
He emphasized that Russians “certainly will not go without cigarettes,” since foreign firms will not abandon a market that hosts more than 30 million consumers.
What does the tobacco market look like in Russia?
The Russian tobacco market ranks among the world’s top five in both consumption and sales. Officially, four foreign companies largely dominate: Philip Morris (Marlboro, Parliament, L&M, Chesterfield, Bond Street, IQOS), Japan Tobacco International (Winston, Camel, LD), British American Tobacco (Kent, Lucky Strike, among others), and Imperial Brands (Davidoff, West, Jade, P&S).
All of them announced withdrawals from the Russian market after new sanctions were introduced in the spring of that year. Several considered transferring operations to local owners, and Imperial Brands has changed owners recently.
Beyond the “white” tobacco market, a shadow market exists. Dozens of small manufacturers and brands from neighboring countries, especially Armenia, Kazakhstan, Kyrgyzstan, and Uzbekistan, operate unofficially. Legally, these are counterfeit goods, yet the quality of such cigarettes is often comparable to licensed brands. They enter Russia illegally, without proper labeling.
In border and rural regions—southern Russia, the Volga region, the Altai—these cigarettes are found more frequently and are typically significantly cheaper than legitimate products. The price gap arises from high excise duties on tobacco—2454 rubles per 1000 cigarettes in 2022, roughly 50 rubles per pack. In many other countries, taxes are lower, so counterfeit options often cost about 50–100 rubles. Familiar foreign brands also migrate into the country through illicit channels.
The Chestny Znak labeling system operator told socialbites.ca that the share of counterfeit tobacco products in the market has been steadily decreasing.
Honest Sign reported a monthly drop in violations tied to tobacco product circulation. The Center for Advanced Technology Development noted that the labeling system makes retailing counterfeit goods markedly harder.
Yet, in the first five months of 2022 alone, authorities detected 147 million packs of cigarette smuggling attempts. If successful, such volumes could deprive the budget of less than 7 billion rubles.
Will parallel import be enabled?
Mark Savichenko, principal analyst at Ivolga Capital, believes Russia will not be left without cigarettes.
“There is no need to fear the disappearance of the four companies’ brands. Before February 2022, parallel imports were already developing in the tobacco market, mainly from CIS countries. With reduced supply from international producers, it is possible to boost tobacco imports from Belarus, Armenia, and other CIS states with minimal costs.”
He predicts attempts to legalize parallel tobacco imports in the medium term, noting that the government would likely want to preserve tobacco excise taxes.
Maxim Osadchiy, head of the analytical department at BKF Bank, did not rule out that the exit of major players could reduce excise tax revenues. In 2021, tobacco consumption totaled about 710 billion rubles, roughly 3% of federal budget income, he added.
“Moreover, the departure of key players may raise illegal tobacco sales, further harming budget revenues,” Osadchy stated.
Currently, tobacco products are not listed as eligible for parallel imports. In May, the Ministry of Agriculture opposed adding tobacco to this list, arguing that identifying rightful owners for tobacco, as for alcohol and food, is very difficult. Including tobacco could spur a rise in counterfeit goods on shelves.
At the time of writing, the Ministry of Industry and Trade referred the request to the Ministry of Agriculture, but there was no response to socialbites.ca about including tobacco products in the list of parallel-import goods.
Cited information comes from coverage by socialbites.ca with official statements and industry analysis. [Citation: socialbites.ca consensus coverage]