After the pandemic period, the year 2022 began with a new crisis – the war in Ukraine. For the tobacco industry, the challenges were multiple – changing supply chains, high risks of inflation, changes in regulatory policies and an almost two-fold increase in illicit sales of tobacco products, notes InfoMarket.
In 2022, tobacco importers faced logistical problems, followed by difficulties in production and delivery.
“At the beginning of the war in Ukraine, the Philip Morris tobacco factory in Kharkiv, which exported cigarettes to 13 countries, including Moldova, ceased its activity. The company had to transfer the production of cigarettes for the Moldovan market to Turkey, which involved additional production costs. The supply problem made itself felt, it was difficult to move all the production at once. The full range became available only in October 2022, which affected our market share in traditional cigarettes by more than 5%”, said Elena Naumenko, director of Philip Morris Moldova, in an interview for the Logos Press publication.
The director of Philip Morris Moldova, Elena Naumenko, stated that the new realities affected both sales and market share. Despite these difficulties, the company quickly managed to adapt and find effective solutions. Throughout this period, Philip Morris Moldova has not reduced its activity, but on the contrary, it intends to expand investments in the Moldovan market.
Last year, Philip Morris Moldova initiated the transfer of the Assistance Center for users of tobacco heating devices from Romania to the Republic of Moldova. In 2023, the company will complete the establishment of this center and make it fully functional, also analyzing the option of expanding services, including for other markets. Thus, Philip Morris wants to contribute to the country’s economy by investing and creating new jobs.
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“After what happened with our factory in Ukraine, we analyzed the local market, at the level of investment opportunities, and we want to relocate part of the production here in Moldova. This step will effectively influence our logistics and support the country’s economy. At the moment I am not ready to provide more details because we are at an early stage, but we are making a great effort to finalize it very soon and then I will be able to provide more information”, said Elena Naumenko.
These plans are a continuation of the attitude and behavior of Philip Morris in Moldova, as a foreign investor. Despite all the problems, in 2022, the company paid 1 billion lei to the budget of the Republic of Moldova.
“I would like to note that, in Moldova, Philip Morris is not just an importer. We are a full-service company engaged in the import, distribution and store network development of tobacco heating devices. In total, PMI created more than 100 jobs. At the same time, we support related businesses – we work with more than 140 companies, which offer services not only in the field of distribution and sales, but also in the field of renting premises, maintenance of sales points, printing, consulting, including legal services. Last year, these services reached the value of 142 million lei”, emphasized Elena Naumenko.
The director of Philip Morris Moldova stated that the existence of a predictable business environment is important for any foreign investor. It allows not only the development of the company in the short term, but also the planning of investments in the medium and long term.
“For us, the predictability of the regulatory authorities is very important, as well as the constructive dialogue between the authorities and the industry. This year, the excise tax calendar for the next three years will be developed. We hope that, when drafting it, the realities of the Moldovan market will be taken into account and a balanced course will be adopted on the fiscal component. The fiscal policy stipulates that, until 2025, the excise duty rate will be at least 90 euros for 1,000 cigarettes, regardless of the average retail price. Now, the excise has reached 58 euros, and its increase to 90 euros in just two years is too risky. The market will suffer significantly, with all the subsequent consequences, both for economic agents and for the country’s economy”, added the quoted source.
Also, during the interview, Elena Naumenko addressed the issue of implementing the “Track and trace” tobacco products tracking system. In his opinion, the initiative is good, and the adopted implementation period of 36 months is optimal.