Russia To Implement New Tobacco Substitutes Policy in September, E-cigarette Prices May Rise Fivefold

Russia to implement new tobacco substitutes policy in September, e-cigarette prices may rise fivefold

Russia will implement a new price control policy for tobacco substitutes from September 1, and the price of e-cigarettes may increase fivefold. The new regulations will set a minimum retail price, which is expected to significantly increase consumer spending and may lead to a reduction in the use of "alternative" smoking products.

 

According to Bst.Bratsk on August 28, Russia will significantly increase the price of tobacco substitutes from September 1, 2024.

 

The Russian government will regulate the minimum price of e-cigarettes, cartridges, hookah mixtures (including tobacco-free) and e-cigarette oils, which will cause prices to soar. The price of some consumables will increase four to five times.

 

Russia will implement new requirements for the sale of tobacco products and set a minimum retail price (МРЦ) for such goods accordingly. Market participants have called these new measures "prohibitive consumption taxes." These measures are likely to significantly reduce the popularity of "alternative" smoking and force many Russians to return to traditional cigarettes.

 

It is reported that merchants must adjust product prices by the end of August to comply with the new regulations, that is, the price floor set by Decree No. 301 of March 14, 2024. However, due to a legal loophole, they need to adjust prices twice - the lower MRP that will come into effect on September 7 was confirmed in Decree No. 1050 of the Government of the Russian Federation issued on August 5, 2024. During this week, the temporary MRP will be very high (for example, the temporary MRP for 30 ml of e-cigarette nicotine oil is 2130 rubles (about $23), and from September 8, this price will be reduced to 1800 rubles [about $20]).

 

The new regulations will apply to all nicotine-containing products, including bottled oil, prefilled cartridges and disposable e-cigarettes.

 

According to Article 7, paragraph 6 of Federal Law No. 203-FZ of June 13, 2023, the government will calculate the minimum price of these products according to a formula that includes the excise tax rate, the VAT rate and the increase coefficient.

 

Although Decree No. 1050 slightly reduces the burden, consumer spending on nicotine products will still surge. For example, the minimum retail price (MRP) for e-liquid (nicotine and non-nicotine) will be 60 rubles (about $0.6) per milliliter, and a standard 30 ml bottle of e-liquid will cost 1,800 rubles (about $20). This is almost five times the current price, which is around 500 rubles (about $5) (according to the data of the "Honest Mark" system). A rough calculation shows that the current monthly consumption of 120 ml (4 bottles of 30 ml) of e-liquid costs about 2,000 rubles (about $22). From September 7, the same e-liquid will cost 9,504 rubles (about $104) (MRP is 1,800 rubles [about $20]/30 ml + the standard 10% markup by distributors + the 20% markup by retailers, a total of 2,376 rubles [about $26]).

 

Liquid in prefilled cartridges or capsules will cost 76 rubles ($0.8) per milliliter, three-ml cartridges will cost 228 rubles ($2.5); liquid in disposable nicotine systems will cost as little as 101 rubles [$1.1] per milliliter (14 ml for 10,000 inhalation patterns, or 1,414 rubles [$15]).

 

In 2024, the excise tax on e-cigarette liquids (containing 0.1 mg/ml and above of liquid nicotine) will be 21 rubles ($0.23) per milliliter, rising to 22 rubles ($0.24) in 2025. The excise tax on tobacco for heated consumption will be set at 9,016 rubles ($99) per kilogram in 2024, rising to 9,377 rubles ($102) in 2025.

 

At the end of April this year, the State Duma discussed a proposal to completely ban the sale of e-cigarettes in Russia. At the end of May, the State Duma and the Russian government announced plans to tighten restrictions on nicotine products, including raising fines for smoking in prohibited areas and imposing fines of up to 7,000 rubles ($77) on parents of children under 16 who smoke.