Sales of alcohol and tobacco have fallen in Ukraine, but there are more vendors
25 March 02:27
In 2025, Ukraine faces a paradoxical situation: despite the increase in the number of tobacco and alcohol sellers, sales of these goods have significantly decreased. This is evidenced by data published by the chairman of the parliamentary committee on taxes and finance, Danylo Hetmantsev, Komersant ukrainskyi reports
In the first two months of the year, the number of valid licenses for retail trade in cigarettes and alcohol increased by more than 30,000, but the revenue from these excisable goods has shown a steady decline.
Decline in tobacco sales: figures and regions
According to Hetmantsev, in February 2025, revenue from the sale of tobacco products amounted to UAH 9.6 billion, which is 8% (UAH 800 million) less than in January. Compared to December 2024, the decline is even more impressive – by UAH 42,500 per license. Overall, the average revenue per license in February amounted to UAH 127,000, which is UAH 7,600 lower than in January.
The largest decrease in sales was recorded in Zaporizhzhia, Cherkasy and Ivano-Frankivsk regions. At the same time, Sumy, Lviv, Chernivtsi, and Khmelnytsky regions saw an increase in revenue. These regional differences may reflect changing consumer habits or the impact of local economic factors.
The number of valid tobacco trade licenses increased by 12,488 over the two months, reaching 75,613.
This indicates that more and more business entities are seeking to enter this market, despite the decline in demand.
Alcohol: falling revenues amid rising licenses
A similar trend is evident in the alcoholic beverage segment. In February 2025, revenue from alcohol sales decreased by 8% (UAH 1 billion) compared to January and amounted to UAH 11 billion. Compared to December 2024, the decline is even more significant – by 33% (UAH 5.5 billion).
The average revenue per license in February amounted to UAH 106,800, which is UAH 8,000 (7%) less than in January and UAH 88,300 (45%) lower than in December last year.
At the same time, the number of issued alcohol licenses increased by 18,435 units compared to December 2024. This increase in the number of sellers amid falling revenues may indicate a market glut or a change in the purchasing power of Ukrainians.
Reasons for this trend
Danylo Hetmantsev, Chairman of the Tax Committee, noted that the situation with alcohol and tobacco trade has common features and needs to be analyzed.
President Volodymyr Zelenskyy signed Bill No. 11090 to increase the excise tax on tobacco products, which had been expected since December 2024.
What does the law change?
Law No. 11090 provides for the following main changes
– Conversion of excise tax rates on tobacco products into euros;
– extension of the current excise schedule until 2028 to finally reach the minimum level set in the EU (EUR 90 per 1000 cigarettes);
– implementation of the European practice of taxation of heating tobacco sticks in terms of differentiation of excise rates compared to cigarettes.
According to preliminary estimates, in 2025, the planned increase in excise taxes should have replenished the state budget by about UAH 20 billion.
How much will cigarettes rise in price
According to the law, in 2025, the specific excise rate on filter and non-filtered cigarettes will increase by 23.4%, from 47 to 58 euros per 1000 pieces.
The minimum tax liability for excise tax will increase by 23.9% – from EUR 63.45 to EUR 78 per 1000 units.
In addition, the rates will be calculated in euros instead of hryvnia.
The document proposes to establish a gradual increase in excise tax rates on tobacco products in the following years.
In 2025, the excise tax will increase by 23%, and in 2026-2028 it will grow by 5% per year.
The cost of a pack of cigarettes is expected to increase to:
- uAH 127.4 in 2025
- 142.1 UAH in 2026;
- 155.8 UAH in 2027;
- 173.6 UAH in 2028.
It is expected that the implementation of the draft law will result in an increase in budget revenues in 2025 in the amount of about UAH 612 million, in 2026 – UAH 5 billion, in 2027 – UAH 9.3 billion, and in 2028 – UAH 13.8 billion.
This increase will lead to a significant rise in the price of cigarettes in the country – the price of a pack may exceed UAH 170 within four years.
