Tag: Belarus

Belarus To Retain Control Over Tobacco

The tobacco business in Belarus will remain under state control, President Aleksandr Lukashenko announced on Dec. 2, 2024, according to BelTA.
While approving the candidacy of Andrei Demidovets for the post of Director General of Minsk Kristall Group Holding Management Co., the president noted that alcohol and tobacco companies in Belarus are managed by the state. “We will stick to this course,” the head of state emphasized.
“Tobacco products, alcohol account for a big part of the budget and this sector closely related to people’s health,” Lukashenko noted. “I do not remember that state-owned enterprises have ever produced something of poor quality. If we have a complete mess on the market, we will have self-distilled vodka or other alcohol of poor quality produced in garages and sold on the market for cheap.
“Therefore, the state control will remain over alcohol and tobacco in the country,” the president said.
December 3, 2024
At the Turning Point

Smuggled cigarettes on the Latvian border
Belarus’ role in the illicit cigarette trade is under scrutiny.
Contributed
For years, Belarus has been under scrutiny for its alleged distribution of illegal counterfeit cigarettes, a practice that is now under severe pressure in the current political landscape. This pressure casts a shadow of uncertainty over the industry’s future.
A cornerstone of the Belarus national budget, the tobacco industry contributed BYR2.5 billion ($76.45 million) in 2023. However, the industry is now facing alarming trends, as highlighted by Belarus President Alexander Lukashenko during a governmental meeting in August 2024.
The reasons for the existing challenges might be different, Lukashenko vaguely said, emphasizing that despite that, “It is necessary to develop measures to preserve production and export volumes to the maximum extent possible.”
The Belarusian tobacco industry has been shrouded in secrecy for over a decade. In 2015, the last time official information was revealed, Belarusian authorities set the quota of cigarette consumption on the domestic market at 30 billion pieces. At that time, local analysts indicated that the figure had nothing to do with reality.
Research by KPMG showed that the actual consumption of cigarettes in Belarus is close to 18 billion pieces. Around 13 billion cigarettes are exported, of which 8.6 billion end up in Russia and 4.3 billion in the EU.
Woes about the flow of cheap cigarettes, often smuggled, from Belarus have become common in recent years not only in the European Union but also in Russia.
In 2020, the Russian association Anticounterfeit calculated that Belarus’ domestic consumption was around 17 billion cigarettes and that production nearly three times exceeded the country’s demand. In a letter to the Russian Ministry of Justice, Anticounterfeit claimed that cheap cigarette production was put on an industrial scale in Belarus. The nameplate capacity of the Belarusian tobacco factories was estimated at 67 billion pieces, meaning export potential was tremendous.
In 2023, Belarus accounted for 84.5 percent of illegal cigarettes sold on the Russian market, estimated the Russian National Scientific Competence Center for Combating Illegal Circulation of Industrial Products. In total, illegal—counterfeit and smuggled—cigarettes represented 15.6 percent of sales on the Russian market. This illicit trade cost the Russian budget around RUB130 billion ($1.35 billion) of lost income in 2023, the analysts calculated.

Belarussian tobacco consumption is estimated to be close to 18 million pieces per year.
Shut Borders
During the past few years, the flow of illegal cigarettes from Belarus to the European Union has subsided, as in the context of political tensions, the Baltic countries and Poland tightened border controls.
As estimated by KPMG, the volume of smuggled cigarettes from Belarus to the EU dropped by 500 million in 2023 and by almost 2 billion pieces over the past three years. The analysts also cite the tighter control and closure of a number of checkpoints on the border for the decline. The place of Belarusian cigarettes is being taken by suppliers from other countries, primarily Turkiye and Algeria.
Counterfeit supplies from Belarus to European countries decreased from 2.1 billion to 1.5 billion cigarettes over the year.
However, Belarus remains the absolute leader in the supply of illegal “white” cigarettes, which mean those smuggled and sold under their own brands to European countries.
In this category, Belarus holds a staggering 43 percent share in total deliveries to Europe. A year earlier, this figure was around 52 percent, KPMG calculated.
The most popular western destination for tobacco smuggling from Belarus is Poland. Last year, 0.74 billion illegal Belarusian cigarettes entered the country, which is almost 17 percent less than in 2022 and almost half as much as in 2020. The supply of illicit cigarettes from Belarus to Lithuania fell by 15.2 percent to 0.39 billion pieces and from Belarus to Latvia fell by 27.35 percent to 0.16 billion pieces.

Russia has declared war on counterfeit cigarettes from Belarus.
Unraveling Tobacco War?
However, the main blow comes from the Russian market, where authorities also tightened the screws on illegal sales. Observers believe that problems in Russia were the key reason for Lukashenko’s concerns during the recent government meeting.
“The meeting is definitely not happening out of nowhere. But we need to call things by their proper names. We are not talking about problems with exports but with smuggling. Legal exports have been virtually nonexistent for a long time,” Nick & Mike, a local analytical Telegram channel reported.
“Strengthening controls on the western border, where Belarusian state counterfeit goods are seized in industrial quantities, including from tanks with resin, is nothing compared to what the eastern neighbor is doing. Russia has tacitly declared a ‘tobacco war’ and has been striking at illegal businesses,” the analyst claimed, referring to the intensified efforts by Russian authorities to curb illegal tobacco traffic from Belarus.
For years, Russian authorities have been turning a blind eye to illegal cigarette imports from Belarus, but this era seems to be coming to its end, a source in the tobacco industry who wished to remain anonymous told Tobacco Reporter.
“I would not call it a war, though. This is primarily about bringing the domestic market in order. Everybody knew that a situation where Russia loses over $1 billion in tax revenues every year to cigarette smuggling from Belarus would not last forever. The country could afford it during the rich times, but now every penny counts,” the source added.
In April 2024, Russia listed tobacco products among the goods of strategic importance. Andrey Mayorov, deputy head of the main directorate for customs control at the Russian Federal Customs Service, revealed that this move helped the authorities tighten their control of illegal tobacco traffic. One of the first consequences of the step, he added, was a hike in the number of criminal cases opened against tobacco smugglers.
More legal changes are on the way to turn down illegal cigarette imports to Russia from Belarus.
An agreement on indirect taxes between Russia and Belarus scheduled to gradually come into force through 2027 is expected to fully protect the Russian market from gray imports of cigarettes from Belarus, assumed Alexei Sazanov, deputy finance minister of Russia.
“The problem of gray imports stems from a significant difference between tax rates in the countries: Russian excise rates on tobacco products are significantly higher than in Belarus. This means that Belarusian tobacco manufacturers, producing cigarettes in their country, simply supply part of the goods to the Russian market, de facto paying taxes at Belarusian rates,” Sazanov explained.
The reform is stretched in time not to provoke “social and economic tensions in Belarus,” the deputy minister added.
Change of Players
The Belarusian tobacco industry is also going through a profound transformation, with Western companies gradually reducing their presence in the country.
In September 2024, Japan Tobacco International and its British subsidiary Gallaher Group terminated licensing agreements with the Tabak-Invest factory, suspending production of the brands Winston, Camel, Sobranie and Monte-Carlo.
JTI’s Minsk office confirmed that the agreement originally concluded in 2008 is no longer in force, declining to provide additional details.
In December 2023, Tabak-Invest and several of its co-owners were subjected to U.S. sanctions. The restrictions prohibited U.S. citizens and businesses from any deals with sanctioned parties.
In the meantime, JTI continues doing business in Russia. In March 2022, the company announced a suspension of investments in its four factories and marketing activity in the country. However, in November 2023, the company announced it would continue operations, complying with international and Russian regulations.
JTI may switch to importing its brands from Russia to Belarus, writes Belmarket, a local business news outlet. Alternatively, the company could sign a new license agreement with a Belarusian tobacco factory that is not subjected to Western sanctions. This could be newcomers Sentoni PRO and Alidi-West, Belmarket’s analysts speculated.
Alidi-West is a Russian company that distributes Kent cigarettes. It kicked off sales in Belarus in July 2024. Sentoni PRO is another firm registered to sell cigarettes in the country this year.
According to the Belarusian Ministry of Taxes and Duties, Sentoni PRO will produce Kent, Pall Mall, Rothmans, Vogue and Lucky Strike brands.
These players may also launch production at the capacities previously run by Western firms.
BAT in Belarus held a contract manufacturing agreement with the Grodno tobacco factory Neman. After Neman was subjected to the U.S. sanctions in 2021, the contract was canceled, and a part of BAT’s production was transferred to Tabak-Invest.
Around the same time, sanctions were also imposed against another Minsk factory, Inter Tobacco, which forced Philip Morris to withdraw from the license production.
In September 2023, BAT announced a deal to sell its business in Russia and Belarus to a consortium of Russian investors and local management, BAT Russia. Upon completion of the “business transfer,” the new structure became known as the ITMS Group of Companies. BAT left the business to its management along with the rights to the trademarks.
The gradual withdrawal of foreign business from Belarus could add pressure to the tobacco industry, which is braced for a hard time ahead.
December 2, 2024
Lithuania Takes Aim at Cigarette Balloons

Photo: andrei310
Lithuania may permit its border guards to shoot down balloons carrying contraband from Belarus or Russia when they cross the border, reports The Baltic Times.
“In my opinion, border guards should have the right to shoot them down in the air,” Defense Minister Laurynas Kasciunas told reporters on Sept. 30.
The minister’s comments came after a balloon, suspected to have come from Belarus and carrying smuggled cigarettes, fell within Vilnius Airport’s airfield on Sept. 28.
Rustamas Liubajevas, the commander of the Lithuanian State Border Guard Service (SBGS), said that border guards have neither the necessary weapons nor the legal authority to shoot down objects that illegally cross the Lithuanian border by air.
He explained that border guards use assault rifles, which do not have the technical capability to shoot down higher-flying objects.
The SBGS has recorded around 250 incidents involving such balloons in the past month.
Poland too has recorded increased attempts to smuggle cigarettes into its territory by air.
October 2, 2024
Smugglers Caught Using Weather Balloons

Image: Bilal
Polish border guards detained two people who had used weather balloons to smuggle cigarettes from Belarus, reports TVP World.
The suspects had attempted to flee and were found with 1,500 packs of illegal cigarettes worth close to PLN24,500 (€6,377).
On the same day, border guards in Nowy Dwor found another similar package containing illicit cigarettes worth over PLN23,000 along with the remains of a weather balloon fitted with a tracker.
Additional balloons were found with packages of cigarettes valued at a combined PLN67,000.
In the wake of enhanced security measures, including a steel barrier and thermal imaging, along the border between Poland and Belarus, cigarette smugglers have been looking for new ways to move contraband into the European Union.
September 23, 2024
Belarus Bans 47 Vapes

Image: natatravel
Belarus’ State Committee for Standardization has banned 47 types of electronic cigarettes from sale, reports Novosti.
In January and February, authorities in the Gomel region identified traders that were selling electronic smoking systems that failed to comply with legislative requirements. Some vapes exceeded the permissible nicotine level of 20 mg per ml, while others lacked health warnings, declaration on usage limitations and expiration dates,
Many of the vapes were sold without documents proving compliance and safety of the product.
The dangerous products were withdrawn from sale, and authorities have taken administrative measures against their sellers.
March 5, 2024
Belarus Smugglers Busted in Poland
Polish law enforcement officials have disrupted the operations of Belarusian tobacco smugglers and seizing large amounts of cash and valuables, according to Europol. The criminals were initially under investigation for drug trafficking in the Netherlands, Spain and the United Kingdom. Intelligence provided to the investigators by Europol revealed that the suspects were trafficking large quantities of tobacco products from Belarus to Poland. The proceeds of these criminal activities were laundered through cash conversion methods, property investments, the purchase of expensive luxury goods and the use of cryptocurrencies.
Police detained 15 individuals and seized considerable amounts of cash seized in zlotys, euros and U.S. dollars, along with gold bars, jewelry, and seven luxury vehicles. The total value of seizures amounted to €2 million ($2.14 million).
Europol’s dissemination of intelligence packages has given investigators new insight into the criminal network. In addition to identifying tobacco smuggling as a source of income, investigators were now able to trace the illicit profits. Analysis of encrypted data intercepted from criminals’ phones also revealed locations used to hide large sums of cash. Europol provided an analyst and a specialist on-site to assist the 200 Polish law enforcement officers involved in the operation.
The European Multidisciplinary Platform Against Criminal Threats (EMPACT) tackles threats posed by organized and serious international crime affecting the EU. EMPACT strengthens intelligence, strategic and operational cooperation between national authorities, EU institutions and bodies, and international partners. EMPACT runs in four-year cycles focusing on common EU crime priorities.
February 20, 2023
EU Sanctions Belarusian Tobacco Firms

Photo: Tobacco Reporter archive
The European Union has imposed sanctions against Neman Grodno Tobacco Factory and Inter Tobako in Belarus, reports Interfax. The measures were announced in The Official Journal of the European Union as part of a larger package of sanctions to punish Russia and its allies for the war in Ukraine.
The package also targets Russian oil exports, financial institutions and vehicle manufacturers whose trucks and cars have been used in the “special military operation.”
The Newman Grodno Tobacco Factory was already subject to sanctions following the controversial re-election of Alexander Lukashenko and the regime’s subsequent crackdown on protests challenging the outcome in 2020.
Accounting for 70 percent of domestic cigarette sales, Neman effectively has a monopoly on the Belarusian tobacco market. The United States says it is one of several entities that receive preferential treatment from the regime in return for providing funds to Lukashenko.
The Neman factory has also been fingered as a major source of illicit cigarettes in Europe. Around 10 percent of the 5.5 billion cigarettes sold illegally in the U.K. annually are believed to have originated in Belarus.
With the average price of a pack of cigarettes in Belarus running the equivalent of about $0.80 compared to $4.30 in Latvia and much higher in other parts of the EU, there is plenty of room for profit in smuggling.
June 7, 2022
Belarusian Cigarette Smuggling at New High

Photo: Tricky Shark
The number of Belarusian cigarettes smuggled through Lithuania is growing at a record pace, reports Belsat, citing figures from Lithuania’s Customs Department.
In the first three quarters of 2021, Lithuanian law enforcement officers seized 328 million smuggled cigarettes, compared to 297 million in 2020.
This year, 16.7 million cigarettes were seized on the railroad alone, twice as many as last year. Cigarettes were usually hidden in bulk cargoes, among fertilizers and crushed stone. The problem is exacerbated by the fact that there is no X-ray equipment at some stations.
Illegal cigarettes account for a quarter of the cigarette market in Lithuania. Of all smuggled cigarettes, 84 percent were produced in Belarus.
Belarus’ state-owned Neman factory has been fingered as a major source of illicit cigarettes in the EU. Around 10 percent of the 5.5 billion cigarettes sold illegally in the U.K. annually are believed to have originated in Belarus.
In September, British American Tobacco in suspended the contract manufacturing of its brands at Neman, following international criticism for Belarus’ heavy-handed suppression of protests against the outcome of last year’s disputed presidential elections.
Accounting for 70 percent of domestic cigarette sales, Neman effectively has a monopoly on the Belarusian tobacco market. Washington says it is one of several entities that receive preferential treatment from the regime in return for providing funds to Lukashenko.
December 20, 2021
BAT Suspends Belarus Manufacturing

Photo: Tobacco Reporter archive
BAT has suspended manufacturing of its brands at a state-owned factory in Belarus accused of fueling cigarette smuggling and helping finance the country’s oppressive regime, reports Inews.
The multinational said it had stopped ordering from the Grodno Tobacco Factory (GTF) Neman, which has a longstanding agreement to manufacture some of BAT’s best-selling brands for the Belarusian market.
Belarus has come under heavy international criticism for its heavy-handed suppression of protests against the outcome of last year’s disputed presidential elections.
Last month, the United States announced sanctions targeting individuals and entities it accused of supporting Belarus’ de facto dictator, Alexander Lukashenko, and his cronies by providing funds for sustaining the violent crackdown.
Accounting for 70 percent of domestic cigarette sales, Neman effectively has a monopoly on the Belarusian tobacco market. Washington says it is one of several entities that receive preferential treatment from the regime in return for providing funds to Lukashenko.
“This patronage network sustains [his] violent regime at the expense of the Belarusian people,” according to the U.S. Treasury.
“Following the recent imposition of international sanctions against several Belarusian persons and entities, including GTF Neman, as well as restrictions targeting tobacco manufacturing materials, we have taken steps to ensure all activities remain compliant,” BAT was quoted as saying by Inews.
“BAT has suspended its operations with GTF Neman and currently does not order manufacturing of its product from this factory.”
The company added, however, that as a result of the sanctions, it was now unable to complete a planned on-site independent audit of workplace conditions at GTF Neman, where there have been allegations of human rights abuses against workers who took part in anti-regime protests.
The Neman factory has also been fingered as a major source of illicit cigarettes in the EU. Around 10 percent of the 5.5 billion cigarettes sold illegally in the U.K. annually are believed to have originated in Belarus.
There is no suggestion that BAT is aware of any illicit trade, and the firm says it has “strong controls” to stop its products entering the black market.
“We are satisfied that BAT Belarus applies all the relevant BAT group policies and procedures with regard to combating illicit trade to ensure that products manufactured by GTF Neman under BAT Group’s trademarks are consumed in the Republic of Belarus,” a BAT spokesperson was quoted as saying by Inews earlier this year.
September 15, 2021
EU Sanctions Target Belarus Tobacco Sector

Photo: andriano_cz
New economic sanctions placed on Belarus by the European Union focused on seven economic sectors, which include petroleum, finance, arms and surveillance technology, and the nation’s tobacco-processing business.
Belarus’ lucrative tobacco-processing industry—the source of a flourishing trade in cigarettes smuggled to the EU—was also targeted with bans on exporting to Belarus goods used in the manufacture of tobacco products. The goods listed include filters, cigarette papers, tobacco flavorings and machinery.
Belarus is a dominant player in cigarette smuggling, which rebounded recently with the increase in EU excise duties on cigarettes and the banning of menthol cigarettes in the bloc. With the average price of a pack of cigarettes in Belarus running the equivalent of about $0.80 compared to $4.30 in Latvia and much higher in other parts of the EU, there is plenty of room for profit in smuggling.
Cigarettes are a huge moneymaker for Belarus and for one of the country’s richest men, Alyaksey Aleksin, who now finds himself among the 166 individuals blacklisted from traveling or doing business with the EU. Aleksin, who was involved in the construction of a new tobacco factory in Minsk, is a major player in the distribution of cigarettes in Belarus and in recent years by presidential decree gained the exclusive rights both to import tobacco and to sell products both at home and abroad produced by the Hrodno Tobacco Factory, Belarus’ largest cigarette manufacturer.
July 20, 2021