Supply and Demand
of tobacco products in SEE

The tobacco market

The tobacco market and tobacco farming are highly regulated in all seven countries in the region, but the influence of different actors on the tobacco market depends on local circumstances. The market value chain consists of the following groups of actors:

  • Tobacco farmers
  • Tobacco processors
  • Tobacco manufacturers
  • Wholesalers
  • Retailers of tobacco products
  • Importers/exporters of tobacco, processed tobacco, and/or tobacco products

In Macedonia there has been a significant presence of tobacco farming, processing and to a certain extent, manufacturing. In Serbia manufacturing of cigarettes and exports of tobacco products have been gaining significance. On the other hand, in countries like Albania, tobacco manufacturing companies do not have a significant presence; the main actors are importers.

Supply of tobacco products

Tobacco farming

Tobacco is not traditionally grown widely in the region. The only exception is Macedonia, which has a long history and tradition of cultivating and exporting raw tobacco (particularly the Oriental type). Macedonia is among the major Oriental tobacco producing countries in the world, accounting for about 3% of world production. However, while the area under tobacco cultivation occupies 3.4% of the total arable land in the country, tobacco farming has a rather small share in total agricultural production and has been declining.

Official statistics show that tobacco farming in Albania represents only a small fraction of agriculture, with just 0.1% of arable land under tobacco cultivation. Tobacco in B&H has been losing its importance for agricultural producers, as the harvested tobacco area has decreased by over 60% since 2000. In Croatia, tobacco cultivation has been at the same level (around 12,000 acres) since 2005, but is expected to decrease as a result of the announced abolition of tobacco production subsidies. Similarly, Montenegro has been recording a significant reduction in tobacco growing due to the increased share of imported cigarettes and the dominance of new cigarette brands using types of tobacco not grown in Montenegro. In Serbia, tobacco farming has a marginal share in agriculture and tobacco production has been declining since 2000.

One of the key characteristics of all countries in the region is that production comes from small family farms. However, over the years the number of farms has been decreasing across the region, with the size of farms showing a slight increase.

Table 2 shows trends in tobacco farming in the period 2010-2017 in seven countries in the SEE region. While major decreases in raw tobacco farming occurred during the period from 2000-2010, which is not presented, Table 2 still reflects the decreasing trend in most countries of the region.

Trends in the volume of foreign trade of tobacco in the SEE region depend on the country. While the volume of imports has been increasing in Serbia, Macedonia, and Croatia, in other countries it has been declining. The volume of exports has significantly reduced in Croatia, while in other countries there has been no significant change since 2010 (Table 3).

Manufacturing of tobacco products

A different set of factors shaped the trends in tobacco products manufacturing in the SEE region after 2000. Major domestic tobacco manufacturers were privatized, while international tobacco companies entered the market.

Albania is the only country in the region that does not have a manufacturing industry. In B&H, there is one active factory, and the manufacturing of tobacco products has recorded a significant decrease. Croatia has had a decreasing level of production of tobacco products, despite its largest manufacturing company, Tvornica duhana Rovinj (TDR), being acquired by British American Tobacco (BAT) in 2015. Kosovo has one factory owned by Premium Tobacco Group with no precise data being available on manufacturing volumes. In Macedonia, local companies were also acquired by leading multinationals which resulted in an increase in imports of cigarettes and a reduced level of local manufacturing. Similarly, the industry in Montenegro is undergoing privatization of state-owned companies, resulting in reduced production after 2013. On the other hand, in Serbia the multinational tobacco companies have been dominating the market since 2004 and have been recording a significant increase in manufacturing (Figure 1).

Large international tobacco companies have significantly expanded their production and sales in the SEE region. Locally-owned manufacturing companies have lost market share after multinationals entered the market and multinational brands replaced the domestic ones. Table 4 presents the major multinational companies in the region by country as manufacturers or importers/wholesalers.

Demand for tobacco products

Tobacco consumption including cigarettes, smokeless tobacco, and cigars, varies by country within the SEE region. Smoking prevalence rates in the region vary significantly, ranging from 28.7% in Albania, to 45.9% in Montenegro in 2016. In all countries in the region (except Kosovo) more than one quarter of the total population are daily smokers. However, a decreasing trend in prevalence is evident in all countries except Croatia.

Regional Study- Part 3 "The tobacco market", page 7

Table 2 Tobacco farming (total tobacco yield in tons)

  2010 2011 2012 2013 2014 2015 2016 2017
Albania 2700 1900 2000 2800 3000 22000 1800 1357
B&H 1854 1835 1494 1812 1740 2196 2315 1760
Croatia 8491 10643 11787 9834 9164 10132 8977 9,413
Kosovo n/a n/a n/a n/a n/a n/a n/a n/a
Macedonia 30280 26537 27333 27859 27578 24237 25443 22885
Montenegro 270 258 106 108 70 52 123 n/a
Serbia 8402 8192 6842 7977 9341 8776 7810 7173

Regional study- Part 3 "The tobacco market", page 8

Table 3 Export and Import of tobacco (in tons)

Import

EXPORT

Import 2010 2011 2012 2013 2014 2015 2016 2017
Albania 45400 3277.0 3688.0 3802.0 3097.0 2548.0 2997.0 3203.0
B&H 6481.3 6273.6 5762.6 4563.4 4341.1 4193.8 4393.2 3919.3
Croatia 3155.9 1515.0 2910.6 2508.6 1425.9 1467.4 948.2 6105.5
Kosovo 3084.9 3343.1 3177.5 3129.5 2928.3 2814.3 2983.7 2776.6
Macedonia 16587.0 21650.0 22538.0 25465.0 23664.0 22549.0 27055.0 16587.0
Montenegro 248.2 165.9 260.5 794.8 840.4 982.1 599.9 74.5
Serbia 10935.4 8908.4 9500.5 8961.2 7327.9 12925.7 22155.9 24885.8

Export 2010 2011 2012 2013 2014 2015 2016 2017
Albania 1077.0 928.0 1127.0 1206.0 1659.0 1288.0 1537.0 290.0
B&H 6481.3 6273.6 5762.6 4563.4 4341.1 4193.8 4393.2 3919.3
Croatia 9519.9 3273.6 4733.8 5136.4 5879.3 4889.4 6462.1 8685.4
Kosovo 32.9 n/a 21.1 26.8 0.0 0.0 0.0 0.0
Macedonia 3108.0 2907.0 3836.0 3665.0 1867.0 2717.0 5806.0 3108.0
Montenegro 24.4 26.4 17.9 31.1 43.7 95.0 211.2 138.4
Serbia 6597.4 5494.4 8039.7 6471.2 6441.6 5991.1 6894.7 7822.0

Regional study- Part 3 "The tobacco market", page 9

Figure 1 Total Annual Number of Cigarettes Produced (mil sticks)

  2010 2011 2012 2013 2014 2015 2016 2017
Albania 0 0 0 0 0 0 0 0
B&H 3733 3157 2546 1810 1538 1690 1326 1083
Croatia 13368 11827 11202 9445 8191 8223 8342 9193
Kosovo 0 0 0 0 0 0 0 0
Macedonia 6826 7721 6573 6507 5112 4020 3897 4100
Montenegro 108 142 535 1186 1206 1096 517 n/a
Serbia 21906 19985 18073 17167 17289 27236 33931 37497