Alcohol and Drug Information Centre (ADIC - Ukraine)

Production, export and import

In late 1980s tobacco production in Ukraine was rather stable - about 80 billion cigarettes annually (Table 1). Most cigarettes were without filters. There was also import of foreign cigarettes, especially Bulgarian. In 1986-1989 the import was about 10 billion cigarettes a year. Export (mainly to other former USSR republics) was from 8 (in 1986) to 19 billion cigarettes (in 1989). 

Since 1990 there have been crises of whole economy and the tobacco industry. Up to 1993 tobacco production decreased almost twice and then started to increase. Anyway tobacco production in Ukraine is lower than in Soviet time (Table 1).

In 1992 most of produced cigarettes (88%) was non-filter ones. In 1995 their proportion increased to the highest level (89%). In 1997 74 % of production was non-filter cigarettes. In 1999 their proportion decreased to 39%. The reason was big difference on taxes for the filter and non-filter cigarettes in 1994-1996 and increase of non-filter cigarettes taxes since 1996. Since 1998 (see Fig. 2) taxes for filter and non-filter cigarettes were mainly equal or close.

During recent years Ukraine experienced expansion of the transnational tobacco companies (TTC). Foreign investors established joint ventures with six of the eleven cigarette factories operating in Ukraine. Four multinational tobacco manufacturers are investing in the Ukraine tobacco industry since 1992 when RJ Reynolds took the first steps by negotiating the purchase of 70% share in both the Lviv and Kremenchuk tobacco factories. It initially invested USD9.6 million in Lviv and USD7.3 million in Krememnchuk. At present this firm, which became Japan Tobacco International, owns 92% stakes in Kremenchuk factory. BAT entered the market in March 1993, when it bought a 65 % share in the Priluky factories, which required a USD 25 million investment over a period of 5 years. In late 1993 Reemtsma came to Ukraine buying 65 % stakes in the Cherkassy (then 92%) and Kiev (then 87%) factories. In spring 1996 Reemtsma began constructing a new manufacturing site just outside Kiev to replace the existing factory. The new factory near Kiev, with a project capacity of 30 billion pieces, was built in 1998. The Prime Minister of Ukraine was present at the opening. In 1994 Philip Morris purchased a 51% share in the Kharkiv factory, investing USD 6 million. In 1995 it invested USD 10 million more and got a 75% share. At present Philip Morris owns a 99.8% share. By the end of 1999, foreign firms promised to invest more than US$520 million. In reality their investments are about USD 180 million (RJR - 26, BAT - 28, Philip Morris - 50 and Reemtsma - 150DM).

6 largest of the total 11 Ukrainian tobacco factories have become joint ventures (See Table 3). Their joint project capacity is equal to 55 billion cigarettes annually, while the joint capacity of the remaining five factories is only 15. In 1995 and 1996 the 6 joint ventures produced respectively 38,6 and 37,7 billion cigarettes or 80 and 84 % of total production in Ukraine. In 1999 the share of joint ventures production was 92% (Fig. 1).

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Сайт противостояния табачной индустрии
Журнал тех, кто не боится быть трезвым
Coalition for tobacco free Ukraine
Центр помощи бросающим курить КВИТ
Международная Независимая Ассоциации Трезвости (МНАТ)
Alcohol and Drug Information Centre - ADIC-Ukraine

 

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