According to a report from Bst.Bratsk on August 28th, starting on September 1, 2024, Russia will significantly increase the prices of tobacco alternatives.
The Russian government will regulate the minimum prices of e-cigarettes, pods, hookah mixtures (including those without tobacco), and e-cigarette liquids, leading to significant price increases. Some consumable prices are expected to rise four to five times their current levels.
Russia is set to implement new requirements for the sale of tobacco products, establishing minimum retail prices for such goods. Market participants have referred to these new measures as a "prohibitive consumption tax." These measures are likely to significantly reduce the popularity of "alternative" smoking and force many Russians to revert to smoking traditional cigarettes.
It has been reported that businesses must adjust their product prices by the end of August to comply with the new regulations, which set a price floor based on Decree No. 301 of March 14, 2024. However, due to legal loopholes, they will need to adjust prices twice - the lower MRPs that will come into effect on September 7 have been confirmed in Russian Federal Government Decree No. 1050, issued on August 5, 2024. During this week, the temporary MRPs will be significantly higher (for example, the temporary MRP for a 30ml e-cigarette nicotine e-liquid will be 2130 rubles (approximately $23), but from September 8, this price will drop to 1800 rubles (about $20)).
The new regulations will apply to all nicotine-containing products, including bottled e-liquid, prefilled cartridges, and disposable e-cigarettes.
According to Article 7, paragraph 6 of Federal Law No. 203-FZ dated June 13, 2023, the government will calculate the minimum prices of these products based on a formula that includes the consumption tax rate, value-added tax rate, and uplift coefficient.
Although Order No. 1050 slightly eased the burden, expenditures on nicotine products are still expected to skyrocket. For example, the minimum retail price (MRP) of e-cigarettee-liquid (with and without nicotine) will reach 60 rubles per milliliter (about 0.6 USD), with a standard 30 milliliter bottle of e-liquid priced at 1800 rubles (around 20 USD). This is nearly five times the current price, which is around 500 rubles (about 5 USD) according to data from the "Honesty Mark" system. Roughly speaking, the cost of consuming 120 milliliters (4 bottles of 30 milliliters) of e-cigarettee-liquid per month currently amounts to about 2000 rubles (around 22 USD). Starting from September 7th, the same e-liquid will cost 9504 rubles (around 104 USD) (MRP of 1800 rubles [around 20 USD]/30 milliliters + distributor standard markup of 10% + retailer markup of 20%, totaling 2376 rubles [about 26 USD]).
Pre-filled cartridges or capsules containing e-liquid will cost 76 rubles (0.8 US dollars) per milliliter, with a price of 228 rubles (2.5 US dollars) for each three milliliter cartridge. The price for e-liquid in disposable nicotine systems starts at a minimum of 101 rubles (1.1 US dollars) per milliliter (14 milliliters in a 10,000 puff mode costs 1414 rubles or 15 US dollars).
In 2024, the consumption tax on e-cigarette liquid (containing 0.1 milligrams/ml of nicotine or more) is set at 21 rubles (0.23 USD) per milliliter, increasing to 22 rubles (0.24 USD) in 2025. The tobacco consumption tax for heated consumption is established at 9016 rubles (99 USD) per kilogram in 2024, rising to 9377 rubles (102 USD) in 2025.
In late April of this year, the Russian State Duma discussed a proposal to completely ban the sale of e-cigarettes in Russia. By the end of May, the State Duma and the Russian government announced plans to strengthen restrictions on nicotine products, including increasing fines for smoking in non-smoking areas and imposing fines of up to 7,000 rubles (77 USD) on parents of minors under the age of 16 who smoke.
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