ECONOMY

Tobacco firms better look for lients abroad

The Greek tobacco industry’s prospects largely depend a continuation of efforts to improve product quality and maintain the successful export drive of the last 10 years, according to a study by the Foundation for Economic and Industrial Research (IOBE). Exports reached 47.8 billion drachmas (140.3 million euros) in 2000, after rising at an average annual rate of 25.1 percent since 1992. The main customers of Greek tobacco products were Turkey (15 percent), Cyprus (13.9 percent), and Jordan, Bulgaria, the UAE, Egypt, Albania and Italy with shares ranging between 7 and 4 percent. Imports rose by an average of 12.5 percent annually in the same period, to 51.4 billion drachmas (150.8 million euros). Most imports came from the Netherlands (38.7 percent), Germany (26.8 percent) and the UK (21.9 percent). Greek tobacco firms have made considerable investments to improve competitiveness and promote new products in recent years, IOBE notes. Competition in the Greek market is strong and focuses less on price – due to the high concentration in the industry – and more on advertising and the promotion of new brands. Cigarette prices have been rising at a faster pace than the general price level. The size of the domestic tobacco market exceeded 1.06 trillion drachmas (3.1 billion euros) in 2000. The State is expected to collect more than 2.09 billion drachmas (6.1 million euros) this year from the special consumption tax on tobacco products, which accounts for 4.9 percent of all budget revenue. The total tax burden on tobacco products (consumption tax and VAT) amounts to 72.75 percent of the retail price. Consumption rose at an annual average of 1.57 percent to reach 32.1 billion cigarettes in the same year, of which only 32.5 percent represented Greek brands, against 52.4 percent in 1992. However, production fell at an average annual rate of 0.24 percent to 34.2 billion cigarettes. Greek smokers appear to be increasingly turning to light cigarettes and to 25-packets. Greece has the highest per capita consumption in the European Union, but the prospects for further demand growth appear limited, the IOBE study said. EU Directive 2001/37 set new standards on the maximum content of tar, nicotine and carbon dioxide in cigarettes, as well as health warnings. A recent draft directive extends the ban on advertising in publications to the Internet, radio and sponsorship by tobacco firms.