Romania therefore remains a very good place for cigarette manufacturers to do business, as each of the three largest companies, British American Tobacco (BAT), Philip Morris and Japan Tobacco International (JTI) have both trading and production facilities near the capital city Bucharest.
Romania is also one of the most permissive countries for smokers, because it still allows smoking in restaurants and promoting products directly to smokers in bars.
The sales of the three companies stood at EUR2.95 billion in 2008, and further dropped to EUR2.4 billion, and stood at EUR2.5 billion in 2009 and 2010 (when smuggling had reached one third of the market), before exceeding three billion euros last year. Why was that?
“Exports of tobacco products amounted to EUR460.5 million last year or 1.02% of Romania’s total exports and imports amounted to EUR218.9 million, or 0.4% of total imports. Therefore one may say that the tobacco industry helps the balance of trade with its export volume,” explains Gilda Lazar, corporate affairs and communications director with JTI Romania, Republic of Moldova and Bulgaria.
JTI Romania’s plant used to export only 5% of its production until three or four years ago. In 2009, exports accounted for 20%, and in 2012 reached 65%, going to more than 45 countries.
Cigarette producers have been among the 100 largest exporters of the country in the last few years, according to the National Statistics Institute.
“Tobacco was the second most exported product in the first half of 2012 (Corn was the first i.e.). Exports of cigars and cigarettes generated EUR226.8 million in revenue by the end of June 2012,” Gilda Lazar said.
Excise duties for exported cigarettes are paid in the country where they are sold, and JTI officials say the company paid 0.3% of the gross domestic product in taxes for the cigarettes sold in Romania last year.
“The tobacco industry contributed about 9% of the total budget revenues from excise duties alone in 2011. The three major companies on the tobacco market contributed EUR2.75 billion in excise duties and VAT to the general consolidated budget,” Gilda Lazar said.
Cigarette manufacturers have expanded their local operations lately. JTI completed a EUR25 million investment in the production capacity of its plant this year and hired 125 people.
(English version by Loredana Fratila-Cristescu)