Plunging Consumption and Increasing Illicit Trade of Tobacco in Hungary

Market by 2FIRSTS.ai
Oct.11.2023
Plunging Consumption and Increasing Illicit Trade of Tobacco in Hungary
Hungary's tobacco consumption has reached 311 billion forints, seeing an increase of 11.3% from last year.

According to recent data released by the Hungarian Central Statistical Office (Központi Statisztikai Hivatal), Hungary's total expenditure on tobacco products reached 311 billion forints (approximately 6.2 billion yuan) showing an increase of 11.3% compared to a year ago. However, when taking into account the inflation rate of tobacco products during this period which stood at 15.2%, the actual consumption volume decreased by 3.9%.

 

Despite the Hungarian National Tax and Customs Administration detecting roughly the same number of tobacco smuggling activities every quarter, the quantities carried by the criminals apprehended have been declining. Therefore, it can be inferred that the average quantity transported is decreasing. However, it remains unknown how much the successful smuggling quantity has increased with the development of technologies such as unmanned aerial vehicle transportation. According to KPMG's research in 2022, although tobacco consumption is decreasing, the illegal market has grown by 3 percentage points.

 

If this trend continues, legal transactions could further decrease, as predicted by the data from the National Tax and Customs Administration (NAV) of the free market. These data reveal a decrease in the sales of cigarettes, cigars, and fine tobacco.

 

Approximately 6 billion cigarettes are sold through legal channels each year, resulting in the payment of tobacco taxes and contributing to national tobacco stores. This figure was double what it was over a decade ago. Simultaneously, the sales volume of e-cigarettes is gradually increasing, despite rampant activity in the black and grey markets. Similarly, heat-not-burn tobacco products are also gaining popularity, although there is currently a lack of long-term sales data for these goods.

 

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