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Trafficking has grown into a billion-dollar business, and the turnaround is already visible

Tobacco shops sold HUF 285.3 billion worth of tobacco products in the last quarter of last year, according to the KSH, and for the whole year this amount exceeded HUF 1,100 billion. 2022 was the first year when tobacco turnover exceeded the thousand billion level, but this is not surprising if we look at the fact that the inflation of tobacco products significantly exceeded the average rate of price increase for years.

This is no longer the case: in 2022, inflation was 14.5 percent, compared to the 8.6 percent price increase of the tobacco group. In 2021, however, tobacco products rose in price by 17.5 percent, while consumer prices rose by 5.1 percent.

At the end of 2020 and in 2021, for example, the increase in the amount spent in tobacco shops was lower than the average inflation of tobacco products, so the volume of products decreased in tobacco shops. However, this does not necessarily mean that Hungarians smoked less, because they may have turned to cheaper alternatives, or they may have obtained the tobacco or the filling liquid from a cheaper and illegal source.

In 2022, however, a clear increase can already be seen in real terms, but due to the complexity of the market and the abundance of substitute options, this does not mean that there are more smokers or that smokers smoke more.

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The legal market for classic cigarettes, i.e. the amount that is released into free circulation, has not changed much in recent years, at least the market was not characterized by such a drop as it was between 2012 and 2014. Legal consumption dropped to 6.5-7 billion threads from the typical 8 billion threads after the transformation of the traffic system.


In the last 1-1.5 years, the consumption of fine-cut tobacco has stagnated, which was preceded by a very rapid rise between 2012 and 2016, and then a slower decline until 2021. It is impossible not to notice that finely cut tobacco – in Hungarian, cigarette filling – was an escape route in addition to the rising prices of boxed cigarettes. At its peak, 7 million kilograms were lost, now it is around 4 million per year.

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It is also interesting that the rising turnover of cigars also broke at the beginning of 2022, but there is no talk of a fall. The cigar product group also includes products of particularly high quality and enjoyment value, such as those that many people use as cheap cigarette substitutes. However, its consumption is significantly smaller than that of cigarettes, around 700-800 million cigarettes per year.

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At the same time, it is not difficult to figure out where smokers “go”, because alternative products, such as electronic cigarettes or heated products, are carving out an ever-increasing share. It is difficult to determine the exact market for these products, on the one hand, many people obtained/obtain liquids from abroad, for example, but the NAV does not have such a long data set as for combustible tobacco.

In any case, it appears that the legal market for e-cigarette refill fluid is already between 25 and 30 million milliliters, compared to the previous 10-15 million.

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In addition, however, there are many products for which a long series of data is not yet available. This includes snus, i.e. tobacco pads, but also nicotine sticks or capsules that need to be heated to produce nicotine vapor.

  • NAV calls the latter a “new tobacco product category”, its turnover is below 3 million pieces (threads) per year.
  • The name of the former is “nicotine-containing product that replaces smoking”, the annual legal turnover of which exceeds 1.1 million kilograms.

Last year, the government earned HUF 476 billion in revenue from tobacco products, which is 15.4 percent higher than the 413 billion in 2021.

The tax increase on cigarettes played a major role in this increase, in connection with which the government was already under serious pressure to comply with the EU’s minimum requirements.

Meanwhile, it also appears that the amount of seized tobacco products dropped significantly in 2022. Since the number of detected cases has even increased, it may be that the smugglers are trying to use smaller quantities, which is not surprising since the authorities are more active on the Ukrainian-Hungarian border due to the war.

Photos: Getty Images