Tobacco in Bosnia-Herzegovina

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Cigarettes dominate tobacco, accounting for 99.6% of sales by value. The initial part of the review period saw the introduction of VAT and a unified indirect taxation system. During the second half of the review period, the adoption of a new law on excise was the most important development. The new law primarily targets cigarettes, setting the basis for a steady increase in excise from mid-2009. The goal is to bring cigarette prices up to average EU levels during the course of the next decade.

Profitability declines
After an initial cigarette excise increase in July 2009, a second increase took place in January 2010 and again in January 2011. The minimal annual excise increase, by law, is BAM7.5 per 1,000 cigarettes. Cigarette manufacturers and distributors have to cope with declining profitability. They have been able to keep price increases to a minimum, but profit margins are very much reduced. The next excise increase is likely to hit consumers the hardest, which is when real opportunities for cigarette substitutes, especially smoking tobacco, will arise.

Leading manufacturers manage to keep price increases to a minimum
Cigarette manufacturers dominate tobacco products sales. The largest regional manufacturer, Adris Grupa (NBO: Rovita doo), and largest domestic manufacturer Fabrika Duhana Sarajevo are the leaders. Consumers remain loyal to brands with a long tradition, especially Drina and Ronhill. Rovita and FDS managed to keep price increases during 2009 and 2010 to a minimum, which was appreciated by their consumers and especially reflected in the growth of Rovita’s market share in 2010.

Convenience vs specialisation
In 2010, convenience was still the most influential factor in the structure of the retail distribution landscape. Three convenience focused channels - convenience stores, kiosks and independent small grocers - dominate retail distribution of cigarettes in Bosnia-Herzegovina. For other less conventional products like cigars and smoking tobacco, the retail distribution pattern is somewhat different, emphasising the role of more specialised retail outlets or horeca, in case of cigars. Recently adopted laws have imposed new restrictions on the distribution of tobacco products, but these are yet to be fully enforced.

Decline of traditional tobacco products
Over the forecast period, cigarette prices will continue to rise, driven by growing excise duty. Consumers are likely to become increasingly interested in substitutes, especially smoking tobacco, as well as cigarettes from illicit trade. Smoking bans are likely to become stricter, which will further discourage smoking and increase demand for smoking cessation aids and/or smoking substitutes, ie e-cigarettes or even smokeless tobacco.

The Tobacco in Bosnia-Herzegovina market research report includes:
Analysis of key supply-side and demand trends
Detailed segmentation of international and local products
Historic volumes and values, company and brand market shares
Five year forecasts of market trends and market growth
Production, imports by origin, exports by destination
Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:
What is the market size of Tobacco in Bosnia-Herzegovina?
What are the major brands in Bosnia-Herzegovina?
Which sector of the tobacco products market is the largest by value sales in Bosnia-Herzegovina?
Which sector of the tobacco products market has been growing the fastest, by volume and value, in Bosnia-Herzegovina?
Which sector is the most heavily taxed in Bosnia-Herzegovina?
Which companies dominate in the total tobacco market in Bosnia-Herzegovina in terms of market share?
What is the distribution channel split for the tobacco products market in Bosnia-Herzegovina?

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+ comments + 2 comments

July 18, 2012 at 4:43 AM

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September 24, 2012 at 11:53 PM

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