The decline caused by the ban on smoking in closed public places will amount to 50 million to 80 million lei (EUR11 million to EUR18 million) on an about RON7 billion market, according to ZF estimates.
As for cigarette manufacturers, they did not make a public statement about this law and whether it will affect their business or not. Romanians spend RON13 billion to RON14 billion on cigarettes a year, since smokers (5 million) make up about one quarter of the country’s population. The market is divided among three giants – Philip Morris, BAT and JTI.
“If we look at other markets historically, the impact of such a ban is small. We expect to see a slight delcine in sales at the bar, but I don’t think the impact will be significant,” says Oprea Bebi, the founder of Bordello, one of the oldest and most popular bars in Bucharest.
“I think Romanian consumers are psychologically prepared for this law because it has been discussed for a long time and took quite a while to come into force.”
A number of 17 of the 28 European Union countries currently prohibit smoking in closed public spaces, in public transportation vehicles and at the workplace.
“Theory says that once this law comes into force, consumption will slightly decline because smokers will drink less. The advantage of the hotel and restaurant sector is that the law enforces after March 8, when the weather will be warm enough for smokers to go outside,” Oprea Bebi says.
Dragos Petrescu, the most powerful entrepreneur in the local restaurant, café and bar industry in Romania, with more than RON100 million revenue last year, agrees. He owns brands such as City Grill, Trattoria Buongiorno and manages Carul cu Bere and Hanul lui Manuc.
“We will see a two to three month impact on the hotel and restaurant business, with a decline of no more than 3% to 5%. Some smokers will go out less often or stay out less while non-smokers will keep coming,” Petrescu said.
“With the law coming into force in the spring, smokers will be able to sit on the patio and by the time winter comes they will have grown used to the situation and go out when they want to smoke. This is what happened across the entire Europe when this law was introduced. Sales went down slightly for two or three months and then things got back to normal.”
The impact on bars and clubs will be stronger than on restaurants, the industry insiders believe. While restaurants will barely notice a decline, the other businesses will see several slower months.
“If we look at what happened abroad, I expect traffic to drop at first. We cannot say for sure what will happen, it’s a lottery here, because the markets do not all react the same way,” says Dani Caramihai, one of the shareholders of the Fratelli group, the largest club business in Romania.
“We expect a slight short-lived decline, though.”
(English version by Loredana Fratila-Cristescu)