Let us think about the way the industry and the smokers have come to settlement with the reality and how they both found a way out. When tax on cigarettes was increased it was the premium brand cigarettes that have taken the beating the most. This was especially so in USA and in particular in four states where the increase in tax was over 200 cents per pack.

This increase in tax is not applicable to Native Indian areas which continued to enjoy the original tax regime. Although the intention behind this increase, by the governments, was the larger interest of public healthcare and clearly not additional revenue generation, the smoking populace and demand were ever increasing. The average age of people taking to smoking has come down from 17 years to 16 years at the same time.

Premium cigarettes such as Marlboro, Virginia Slims, Camel, Winston, Davidoff, LM and Dunhill amongst many, which accounted for over 85% of sales, had to follow what other generic brands had done. Eastern Europe was identified as one destination which offered very attractive incentives to manufacturing activities including tobacco industry.

Many Eastern European countries have tax free regimes while others have low taxes for tobacco manufacturing. This is an opportunity for all those that is somebody in the industry. Now, at this juncture, it is quite apparent but interesting to know how the cigarette industry is utilizing the opportunity…