The Double Blow Of High Taxes And Bans Has Brought About A Change in The Russian E-cigarette Market.

According to the Izvestiya news report, the lower house of the Russian Federation may review a bill banning electronic cigarettes in March. The bill was initially proposed by the Communist Party of Russia and will revise Article 19 of the Federal Law "Regarding the Protection of Citizens' Health from the Effects of Secondhand Smoke, Smoking or Consumption of Nicotine-Based Products", prohibiting retail and wholesale trade of nicotine-containing and nicotine-free e-liquids, as well as the sale of related equipment. According to the Parlamentskaya Gazeta, if the bill is passed, the new law could come into effect as early as September 1, 2025.
Supporters believe that the bill will help curb the growing trend of e-cigarette popularity, especially among young people. However, critics are concerned that this will promote the sale of more harmful combustible cigarettes, as cigarette sales in Russia have been on the rise in recent years.
According to data from the Center for Advanced Technology Development (CRPT), the Russian cigarette market grew by 18.9% in 2024 compared to the previous year. Official data shows that last year, Russians spent 1.4 trillion rubles (approximately 16.1 billion US dollars) on traditional cigarettes, compared to 1.2 trillion rubles the previous year.

As before, the Far East region of Russia - a relatively isolated part - still leads the country in terms of per capita cigarette consumption. A large amount of cigarettes are imported into this region from Asia. Magadan Oblast and Kamchatka Krai rank high in cigarette consumption, with per capita consumption approaching 120 packs, much higher than that of the Russian European part.
The Russian regulatory agency reported that the overall upward trend in the Russian cigarette market can be attributed to multiple factors. Cigarette sales increased by 9.8% year-on-year, but this growth does not necessarily indicate an increase in the smoking rate. The Russian authorities believe that improved tracking and tracing measures have played an important role in revealing some cigarette sales from the black market, which were previously invisible to government agencies.
CRPT estimated: "Five years ago (when the government initiated reforms), the proportion of illegal cigarette sales in the Russian cigarette market was close to 15.6%. By the third quarter of 2024, this figure dropped to 10.8%."
The Russian regulatory agency claimed: "This factor has driven the growth of legal cigarette sales."
The government's efforts to raise cigarette prices have also driven the growth in the value of the cigarette market.
Since January 1, 2023, the minimum price of cigarettes in Russia has been set at 119 rubles per pack, higher than 112 rubles in the previous year. From the beginning of 2025, this figure will further increase to 135 rubles per pack.
According to data from the Scientific Center for the Scientific Ability to Combat Illegal Circulation of Industrial Products in the Field of the State, in the first nine months of 2024, the output of Russian cigarette factories increased by 6.8% to 7.59 billion packs.



The black market still exists despite the claims of progress. Russian government officials and independent analysts remain concerned about the persistence of the illegal cigarette business.
At a government meeting in 2024, Finance Minister Anton Siluanov warned that the "underground" part of the Russian tobacco market was causing damage to the national budget.



The Finance Minister estimated that this issue causes an annual loss of about 150 billion rubles in tax revenue for the Russian budget.
He said: "This is a huge amount of financial resources that we urgently need," referring to the high costs of the ongoing conflict between Russia and Ukraine.
The situation is particularly severe in some regions of the country. The Scientific Center for Combating Illicit Circulation of Industrial Products in the Field of Trade and Industry estimates that in some areas, the proportion of illegal sales could be as high as 30%.
Illegal sales are mainly driven by smuggling from other countries of the Eurasian Economic Union, including Belarus, Kazakhstan, Kyrgyzstan, and Armenia.
Alexey Chikov, the director of sales and marketing affairs at Philip Morris Sales and Marketing Company, told local media: "Ten years ago, the trade of illegal tobacco products was no more than 1%."
However, when the Russian government began to gradually increase the consumption tax on tobacco products, the price gap became obvious compared to cigarettes produced in neighboring countries.
Alexey Sinitsyn, a member of the Russian parliament, disclosed at the 2024 parliamentary session that the difference in consumption tax rates would push the proportion of illegal sales containing nicotine oil to 75%.



The return of combustible cigarettes According to official data, the sales of combustible cigarettes may be boosted again due to the planned ban on e-cigarettes, which seems to have gained widespread support. In a recent public opinion survey conducted by the Chairman of the State Duma, Vyacheslav Volodin, over 265,000 respondents indicated that they supported the proposed ban on e-cigarettes.
Sergei Leonov, the Chairman of the Health Protection Committee of the State Duma, explained that this measure aims to protect children and teenagers who do not smoke traditional cigarettes.
He claimed: "This is an epidemic sweeping over children. The measures we take are the only feasible way to protect children from this 'infection'. In some cases, the harm of vaping far exceeds that of smoking cigarettes." This statement contradicts the research conclusion that e-cigarettes are significantly less harmful than smoking.
Some lawmakers are concerned that e-cigarettes might be used to consume prohibited substances.
Viktor Zykov, the Deputy Director of the Department for Prevention of Medical Risk Factors, said: "A teenager might be vaping next to you while walking. The liquid inside is not just nicotine-containing smoke oil, but something like tetrahydrocannabinol - a component of marijuana."



The highest tax rate in the world. After imposing extremely high taxes on e-cigarette cartridges for several months, the lawmakers announced their plan to ban e-cigarettes.
According to the Russian Libertarian Party's estimation, under the new system (which also sets a minimum price for e-cigarette cartridges), the average market price of e-cigarette cartridges has soared nearly fivefold.
The party representative warned: "For an average e-cigarette user who consumes about 120 milliliters of e-cigarette cartridges per month (equivalent to four 30-milliliter bottles), the current cost of e-cigarettes is approximately 2,000 rubles. With the introduction of the minimum retail price, this figure has soared to 9,800 rubles."
The Russian newspaper Vedomosti reported, citing market participants, that the sharp increase in e-cigarette prices in 2024 was one of the key reasons for the rise in traditional cigarette sales in the country.
The Libertarian Party stated: "The sharp increase in the cost of e-cigarettes will inevitably lead to a considerable number of consumers giving up e-cigarettes. However, they may not give up nicotine but turn to cheaper alternatives, such as regular cigarettes."
In fact, the Russian Libertarian Party claimed that it levied the highest tax on e-cigarettes in the world.



According to NeoAnalitics, a Moscow-based think tank, the sales of e-cigarettes in Russia reached 170 billion rubles in 2023. Over the past few years, this market has experienced rapid growth, with the number of e-cigarette stores once exceeding those of traditional cigarette sales outlets. It is not yet clear to what extent the introduction of a minimum sales price in 2024 has hindered sales.
The Liberal Party claims that to maintain low prices, some manufacturers of e-liquid may partially sacrifice product quality and switch to cheaper and potentially more harmful ingredients.
Facing the impending ban, thousands of e-cigarette stores that opened in Russia in the past few years are preparing to close and lay off staff in 2025. Only a few e-cigarette store networks have shared plans to convert their business to selling alcohol, candies, or other products.
Water pipe ban: A momentary impulse With the heating up of the anti-e-cigarette movement in Russia, the authorities have also turned their attention to other forms of tobacco consumption. In February 2024, National Duma member Sultan Khamzaev proposed banning the production and sale of water pipes in Russia. The lawmaker emphasized that water pipes are "mass consumer inhalers" that are often not properly disinfected. He added that a single water pipe could be used by dozens of people in a day, passing bacteria through pipes. Hamzaev warned: "The risk of infection with staphylococcus, Pseudomonas aeruginosa, COVID-19 and other infectious diseases that can cause serious consequences for health is very high." Hamzaev is known for proposing radical suggestions related to the Russian tobacco market. In January 2024, he proposed nationalizing all international-owned cigarette factories in Russia. Over the past few years, Russian authorities have imposed a series of restrictions on the use of water pipes in public places. However, observers believe that the possibility of a complete ban on water pipes in the country is close to zero.