After the 55% customs duty on cigarette imports was lifted in May 2004, the Czech Republic has become a major importer of cigarettes. Imports are cheaper than producing cigarettes at home, reports the Czech daily Hospodarske Noviny.
Between January and May this year, cigarette imports were almost twice as high as imports of raw materials. Czech tobacco producers have started to shut down some of their facilities due to this fact. Philip Morris is to close its plant based in Hodonin, in south-east Czech Republic, at the end of July. Last year in July, British American Tobacco (BAT) ceased operations in the Czech town of Marianske Lazne.
“Since the customs duty was lifted, this plant is no longer interesting for us,” said Pavel Mucha, financial director at BAT. The company currently imports all its cigarettes, largely from a nearby factory in Germany’s Bayreuth.
Other countries in the CEE are experiencing cigarette facility closures as well. “The only exception will probably be Poland, where the market is sufficiently large for the concerns to continue production,” said Richard Vavrik of Imperial Tobacco. Imperial Tobacco closed its manufacturing plant in Slovakia last year. The company also ceased production of cigarettes in Slovenia and Hungary.
Some 22 billion cigarettes, worth CZK 40bn (€1.32bn), are sold in the Czech Republic every year.