December 12, 2008 - Prices for cigarettes produced by Bulgaria's Bulgartabac Holding are to increase by 26 percent starting in January 2009 due to higher excise duty, the company's managing director, Korneliya Ninova, recently announced.
The most popular Victory packs will cost BGN 3.45 (USD 2.36, EUR 1.76) instead of the current BGN 2.75 (USD 1.88, EUR 1.40). Melnik will be the most costly Bulgarian brands - BGN 2.90 (USD 1.98, EUR 1.48). A price of BGN 3.15 (USD 2.16, EUR 1.61) will be introduced for largely smoked Sredetz packs.
Contraband cigarettes account for 15-20 percent of the market in Bulgaria (May 2008) - contraband usually increases in cases of price hikes.
The move is expected to get many inveterate smokers round to quit their unhealthy habit.The smoking prevalence in Bulgaria is high, about 50% of the adult population according to 2005 figures, and smokers in Bulgaria tend to smoke, on average, more than 20 cigarettes a day, making them one of the most prolific smoking groups in Europe. (Cigarette smoking in Bulgaria - the latest numbers by Petar Kostadinov, the Sofia Echo, 5/30/2008)
Bulgaria’s entry to the EU in January 2007 saw the local monopoly, Bulgartabac, strongly decline. Open gates to foreign giant cigarette brand raids left Bulgartabac in a hopeless defensive position. British American Tobacco Bulgaria EOOD (BAT) and Philip Morris Services Bulgaria EOOD (PM) grabbed shares with cheap well-established foreign brands.
Cigarette maker Bulgartabac registered a 50,59% increase in sales revenue in the first nine months of 2008 compared to the same period of 2007. The total amount of the increase in sales revenue for this period is BGN 14,102 M. At the same time the total net revenue of the company in January-September, 2008, amounted to BGN 54,344 M. However, much of the revenue came from the sale of two of the monopoly's four cigarette plants located in the cities of Plovdiv and Stara Zagora. The two factories were sold on the Sofia Stock Exchange in July in order to restructure the company and to consolidate the production in the cities of Sofia and Blagoevgrad.
Reference: Bulgaria Enters 2009 with Cigarette Prices Hike, Novinite - Sofia News Agency, 11/28/2008.
More on Bulgaria and Tobacco: World Tobacco - Eastern Europe - EU expansion offers opportunities and challenges; Euromonitor: Tobacco in Bulgaria.