Austria's NGP Market Share Increased to 7%

Regulations by 2FIRSTS.ai
Jan.05.2024
Austria's NGP Market Share Increased to 7%
Austria's tobacco tax revenue remains stagnant despite rising cigarette prices, prompting calls for reform to tackle tax losses from alternative products.

According to Vienna, Austria's tobacco tax revenue in 2023 amounted to approximately 2.1 billion euros, including 2.7 billion euros from value-added tax, as reported by the Austrian branch of Japan Tobacco International (JTI Austria). Despite a price increase of approximately 30 Euro cents per pack of cigarettes last year, tax revenues remained stagnant at the levels of the previous two years.

 

According to Ralf Wolfgang Lothert, a member of JTI Austria, although tobacco prices are rapidly increasing, tax revenues are maintaining a stable level. This indicates the need for reforms in the coming years.

 

The market share of traditional tobacco is declining, while new forms of tobacco such as heated tobacco products are on the rise. Currently, these new products hold approximately 7% of the market share, and this figure continues to grow. However, smokeless tobacco alternatives like nicotine pouches or e-cigarettes have a relatively small market share in Austria. The lighter tax burden on these alternatives compared to traditional tobacco results in annual tax revenue losses in the tens of millions of euros.

 

According to data from JTI, the traditional tobacco market has remained stable over the past year, with total annual sales reaching 12.6 billion units, including some untaxed tobacco in Austria. Ross Hennessy, the President of JTI Austria, stated that this reflects a "moderate decline" in sales compared to 2022, making tobacco prices more expensive for consumers. The average selling price has risen from 5.502 euros to 5.77 euros.

 

However, the annual sales of tobacco shops reached 3.8 billion euros, with average earnings experiencing a slight increase. Additionally, the commercial profit margin rose by 8.2%, reaching 191,000 euros.

 

Illicit tobacco, smuggled into the country, has accounted for 11.6% of the market share in the past year. As a portion of this tobacco has evaded taxation in Austria, the estimated tax revenue loss for 2023 amounts to approximately 285 million euros. This translates to a loss of around 91 million euros for producers and retailers.

 

In Austria, 76% of the price of a pack of cigarettes goes towards tobacco tax, while the remainder is allocated to the producers, wholesalers, and tobacco merchants. With an average price of 5.77 euros per pack, cigarettes in Austria are more expensive compared to neighboring countries such as Slovakia and Slovenia (4.60 euros each), Hungary (5.57 euros), and Italy (5.20 euros). Cigarettes are even pricier in Germany (7.00 euros), Switzerland (8.71 euros), and the Czech Republic (5.84 euros).

 

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