Tag: Poland

  • Smugglers Caught Using Weather Balloons

    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.

  • Poland Mulls Minimum Vape Sales Age

    Poland Mulls Minimum Vape Sales Age

    Image: marog-pixcells | HP_Photo

    Polish Health Minister Izabela Leszczyna wants to ban e-cigarette sales to minors starting Jan. 1, 2025, reports Polskie Radio.

    The government is currently soliciting public input on a draft amendment to the Act on Protection of Health Against the Consequences of Tobacco and Tobacco Products, which would prohibit e-cigarette sales to people under 18, irrespective of nicotine content.

    The authors of the draft stress that this measure is essential to curb e-cigarette use among young people. They also note that nicotine-free e-liquids are not without risk as they may contain substances like formaldehyde and acetaldehyde.

    Proponents of the legislation also worry that flavored e-cigarettes may entice youths who might otherwise avoid tobacco products.

  • Not Lost Yet

    Not Lost Yet

    Photo: JTI Poland

    While struggling with rising cost and mounting regulations, Polish tobacco companies can cheer the retreat of the illicit market.

    By Vladislav Vorotnikov

    In the next few years, Poland may lose a part of its competitive edge as a regional tobacco superpower owing to controversial European Commission policy. This will happen unless common sense prevails or the government finds the courage to stand up to Brussels, according to market players.

    Poland is one of 12 countries in the EU that grows tobacco. For eight, including Poland, this is a strategic economic sector. Poland is also the largest exporter of tobacco products in the EU, with nearly 10 percent of the country’s agricultural and food exports, 80 percent of which goes to the EU market.

    The last few years have been rough for Polish tobacco growers, primarily owing to surging operating costs in Europe, according to Lukasz Szymanski, owner of Solidus Tobacco, a trading company.

    “Unfortunately, in recent years, we have observed a systematic shrinking of the tobacco-growing sector in Poland. This was caused by systematically rising energy and labor costs, which were the main obstacle for many growers,” Szymanski said.

    Szymanski, who has been in the tobacco business since 2015, selling mostly green tobacco and tobacco in the form of strips primarily to European customers, last year moved to expand activities and open an additional branch in the port of Trieste, Italy, eyeing markets outside the EU, specifically in the Middle East.

    Weak demand in the European market might be a key rationale for Polish tobacco businesses to seek opportunities overseas.

    “For many years, market tobacco purchase prices remained at the same level, which effectively discouraged many farmers from further cultivation,” Szymanski said, adding that since he stepped into the market, he saw a gradual decline in the sales volumes, which, he calculated, nearly halved between 2016 and 2022.

    In the coming years, the lives of Polish tobacco growers could become even more challenging. Market players are increasingly concerned about the fallout of the November summit of the World Health Organization in Panama. This summit, in the opinion of some Polish tobacco businesses, has been perceived as a public declaration of war on the industry.

    “We are afraid that the Polish tobacco industry will be killed by [the] Panama [summit]. The threat of unemployment hangs over us. We do not understand why employees of legitimate businesses should fall victim to international interference in Polish affairs,” said Marcin Klimczyk, chairman of the National Section of Tobacco Industry Workers.

    Polish leaf producction has steadily declined in recent years. (Photo: Solidus Tobacco)

    Bracing for Impact

    At the end of 2023, Polish businesses, united in their concerns, appealed to the government, seeking protection. Among other things, the National Chamber of Commerce, a prominent business union, has questioned the rationale behind participating in the WHO tobacco convention, voluntarily accepting constraints on tobacco business. The organization indicated that the countries not taking part in the initiative, specifically the United States and Great Britain, are more successful in fighting tobacco addiction.

    Accepting new rules will have a heavy impact, not only in Poland but also in the entire EU, players believe.

    “I am surprised that Europe is moving in this direction,” Marek Kowalski, chairman of the Federation of Polish Entrepreneurs, told Rzech Pospolita. “There will come a time when the EU will no longer be competitive on the tobacco market with countries outside it, which will willingly fill this gap.”

    Poland is the world’s largest manufacturer of nicotine sachets, noted Zbigniew Jankowski, a spokesperson from Swedish Match.

    “We are convinced that the implementation of the WHO recommendations by the EC after Panama may lead to a ban on their sale in Europe and, in fact, to the destruction of this fledgling market. Companies will go bankrupt; people will go out of business,” Jankowski said.

    On top of that, many people who have given up cigarettes in favor of less harmful alternative products, such as nicotine sachets, will be deprived of them if the WHO recommendations are implemented. This could have a significant impact on public health and the industry’s revenue.

    Polish tobacco companies are increasingly looking for opportunities overseas.

    Flourishing Industry

    In the long run, new regulations can undermine the investment attractiveness of the Polish tobacco industry, which secures roughly 8 percent of taxes for the national budget.

    In the past few years, the general mood in the Polish tobacco industry was predominantly positive.

    Cigarette volume sales declined by less than 1 percent in 2023 while the value grew due to increased prices, Euromonitor International, a think tank, calculated.

    “In 2022, the influx of refugees from Ukraine strongly revived cigarette sales, but the impact of this factor weakened in 2023. This factor also resulted in lower volume sales of fine-cut tobacco. Meanwhile, novelty nicotine and tobacco products, such as e-vapor products, heated-tobacco products and nicotine pouches, continued to show a significant increase in demand,” said Lina Sidorenke, an analyst with Euromonitor International.

    “Closed-system disposable devices emerged as the big winner with the strongest growth in 2023. Demand for cigars remained stable; however, high demand in Asian markets and the USA has led to fewer cigars being imported to Poland. Despite regular excise duty increases, Poland still stands out in the region for low prices of tobacco products,” Sidorenke said.

    Moreover, Poland has recently achieved drastic progress in fighting against illicit trade in the tobacco market.

    In recent years, the illegal sales of cigarettes in Poland have declined dramatically, Sidorenke claimed.

    “As of 2023, the gray market comprised less than 5 percent of all cigarette volume sales. Poland has demonstrated significant success in combating illicit trade, thanks to a united effort by the police, Border Guard and National [Revenue] Administration,” Sidorenke indicated, adding that in the past, a significant portion of contraband previously originated from Belarus and Ukraine, but the imposition of sanctions on Belarus and the war in Ukraine has led to stricter border controls, resulting in a significant decrease in illegal inflows to Poland.

    JTI Poland has invested heavily in reduced risk product manufacturing.

    Emerging Niches

    The positive developments encourage international giants to pump more money into their Polish operations, primarily eyeing the segment of heated-tobacco products.

    “While sales of traditional tobacco products in Poland are relatively stable, the heated-tobacco products category has been constantly growing in the last five years, accounting for about 11 percent of the entire nicotine market in the country today,” commented Adrian Jablonski, corporate affairs and communications director of Japan Tobacco International Poland.

    “In response to these evolving consumer trends, we introduced Ploom X—JTI’s third-generation heated-tobacco product—to the Polish market in September last year. Our heated-tobacco sticks [HTS] are produced at the state-of-the-art factory in Stary Gostkow, where we have already invested over $200 million in the reduced-risk products factory,” he added.

    Jablonski added that JTI plans to continue to develop the HTS category in Poland, though the company cannot reveal details for competitive reasons.

    However, the segment may also feel the sting of the tightening regulations in the foreseeable future.

    In February 2024, Polish Health Minister Izabela Leszczyna announced that the government was considering a ban on the sale of disposable electronic cigarettes, as reported by the local newspaper Business Insider.

    Leszczyna added that she would like to pursue the fastest possible legislative path to such a measure, given that as many as 64 percent of young people in Poland had “contact” with the product.

    “Single-use e-cigarettes currently dominate the e-vapor product market in Poland. This trend has surged over the past three years. If Poland were to follow the U.K.’s lead and implement a ban on disposable e-cigarettes, it could significantly impact the entire e-vapor market,” Sidorenke said.

    Sidorenke added that while some consumers may transition to other alternatives within the sector, a decline in overall e-vapor market demand is likely.

    Heated-tobacco products in Poland currently face fewer regulatory restrictions compared to combustible cigarettes, with lower taxation and continued availability of flavored products. Despite calls from the European Commission for Poland to adhere to EU regulations prohibiting flavored heated-tobacco products, they remain on sale as of April 2024.

    “However, it’s anticipated that new regulations will be implemented rather soon. It’s worth noting that the market has historically adapted to regulatory changes, as seen after the ban on flavors in traditional cigarettes. Thus, even with a potential flavor ban, the market is expected to adjust accordingly,” Sidorenke indicated.

    In the next five years, the tobacco and nicotine market is expected to advance toward the development of next-generation novelty products, partially at the expense of traditional cigarettes and smoking tobacco, Euromonitor International analysts forecast.

    A negative or uncertain forecast is anticipated for cigars, cigarillos, snuff and pipe tobacco. Beginning May 20, 2024, all tobacco products in Poland will be subject to the track-and-trace system. Previously, the EU track-and-trace system only covered cigarettes and fine-cut tobacco. However, as of May 2024, cigars, cigarillos, snuff and pipe tobacco will also fall under this system.

    “This expansion will impose additional burdens on manufacturers and retailers due to the costs, complexity and compliance requirements. In anticipation, some distributors have already indicated plans to withdraw these items from their offerings after the system comes into effect,” Sidorenke said.

  • Poland Mulling Ban on Disposables

    Poland Mulling Ban on Disposables

    Photo: Yelena Belodedova

    Polish Health Minister Izabela Leszczyna is mulling a ban on the sale of disposable electronic cigarettes, according to the Polish edition of Business Insider.

    Leszczyna added that she would like to pursue the fastest possible legislative path to such as measure, given that as many as 64 percent young people in Poland had “contact” with the product.

    The news comes after the United Kingdom announced a ban on single-use cigarettes in January.

    Meanwhile, Poland is preparing to implement the EU directive banning the sale of flavored heated tobacco products. According to local media reports, the regulation may take effect from next year.

    The EU directive prohibits the placing on the EU market of flavored heated tobacco products and removes the possibility for member states to grant exemptions for such products from certain labeling requirements set out in EU law.

  • Poland: PMI Invests in HnB Stick Production

    Poland: PMI Invests in HnB Stick Production

    Photo: Hamik

    Philip Morris International will invest PLN1 billion ($229.81 million) in the production of heated tobacco sticks at its factory in Krakow, Poland, reports PAP.

    “Today, Philip Morris International has decided on a new investment. We want the production of a new generation of heated tobacco sticks to take place in our factory in Krakow,” Michal Mierzejewski, president of PMI for northeast Europe, told journalists on Sept. 12.

    “We estimate that this investment… will create many jobs,” he added.

    According to Mierzejewski, the tobacco sticks produced at the Krakow plant will be distributed both in Poland and on the international market.

    Since 1996, PMI has invested nearly PLN25.5 billion in Poland, Mierzejewski added.

  • Shipper Responsible for Tax on Stolen Cigarettes

    Shipper Responsible for Tax on Stolen Cigarettes

    Photo: Siwakorn1933

    JTI Polska is responsible for hundreds of thousands of pounds in excise duties on cigarettes stolen during transport, the U.K. Supreme Court ruled June 14, reports Law360.

    Thieves took 289 cases from a JTI Polska vehicle parked at a U.K. service station during a trip from Poland to Jakubowski in the U.K.

    Jakubowski sought to recover from JTI the excise tax of about £450,000 ($570 million) owed on the stolen goods.

    The ruling in a similar case that determined which party pays the tax in the event goods are stolen remains valid, and there is no pressing reason to overturn it, the court said.

  • Belarus Smugglers Busted in Poland

    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.

  • Illicit Cigarette Market Retreats in Poland

    Illicit Cigarette Market Retreats in Poland

    Photo: Tobacco Reporter archive

    Illegal products accounted for 6.3 percent of all cigarettes sold in Poland during the first quarter of 2021, down from 9.4 percent in 2020, reports the Warsaw Business Journal, citing a study by the Almares Market Research and Consulting Institute.

    The share of illegal trade in cigarettes in the Polish tobacco market has been gradually decreasing since 2015 when it exceeded 18.3 percent. Each percentage of the market recovered for the legal sale of cigarettes equates to an estimated PLN250 million ($65.63 million) in additional revenues for the government. The Almares Institute report shows that the market share of counterfeit tobacco products has also decreased from 1.3 percent in 2020 to 0.7 percent in the first quarter of this year.

    “In the first half of 2021, we seized nearly 169 million cigarettes and 410 tons of tobacco while liquidating 10 illegal cigarette factories,” Iwona Jurkiewicz, chief inspector of Poland’s Central Bureau of Investigation, was quoted a saying.

    The market for legal tobacco products is estimated at 60 billion pieces of cigarettes and e-cigarettes.

    Poland has performed comparatively well recently in the fight against the illegal cigarette trade. In the Schengen countries, the average share of illegal products in 2020 was 7.8 percent, 0.5 percent higher than the year before.

    A KPMG report shows that in 2020, the illegal market accounted for 23.1 percent of the market in France, 22.4 percent in Greece and 20.2 percent in Lithuania.

  • Video: Polish Authorities Dismantle Illicit Factory

    Video: Polish Authorities Dismantle Illicit Factory

    The Polish authorities have dismantled an organized crime group involved in the production of illegal cigarettes, reports Europol.

    On July 27, more than 100 officers from Poland’s border guard searched locations across the province of Warsaw. An illicit factory was dismantled, and 16 suspects were charged for their involvement in this illegal tobacco activity. The leader of the criminal organization features among those arrested.

    More than 1.6 million counterfeit cigarettes were seized on site by the Polish authorities alongside 13 tons of tobacco that could have been used to produce a further 13 million cigarettes. The tax loss for the Polish treasury is estimated at about €3.8 million ($4.51 million).  

    The factory’s estimated production capacity was approximately 1 million cigarettes per day. The counterfeit cigarettes were destined predominantly for the U.K. and Germany, where they would have had a value of up to €9.7 million.

  • Video: Arrests in Anti-Counterfeit Operation

    Video: Arrests in Anti-Counterfeit Operation

    An international law enforcement operation involving the Netherlands, Poland and Europol has resulted in the arrest of 30 members of a prolific organized crime gang flooding Europe with millions of counterfeit cigarettes.

    According to Europol, 94 tons of tobacco and 5.4 million counterfeit cigarettes have been removed from circulation following this international sweep. This gang is also believed to be involved in violent robberies.

    This operation was carried out in the framework of the European Multidisciplinary Platform Against Criminal Threats.

    Code-named operation PITBUUL, this operation took part in two phases. A first action day was carried out in the Netherlands at the end of March. Two illegal factories were dismantled in the Dutch cities of Schaijk and Heerlen with a production capacity of more than 1 million cigarettes per day, which equates to a tax loss of over €243,000 ($294,521) per day per factory.

    A total of 21 Polish and Ukrainian workers were arrested on-site, and 5.4 million counterfeit cigarettes were seized alongside 40 tons of raw tobacco and 800 kilos of hookah tobacco.

    A second action day was carried out in Poland last week to arrest the criminal masterminds running this gang. On this occasion, Polish law enforcement raided a dozen of addresses across the country. As a result, nine individuals were arrested and 54 tons of tobacco were seized alongside machinery used for the production of cigarettes. Officers also seized firearms and weapons alongside clothing resembling police uniforms, radio communication devices and signal jammers. According to initial estimates, the loss to the Polish budget is estimated in excess of €11 million.

    Europol supported this case by organizing operational meetings, facilitating the exchange of information between the different countries involved and analyzing the operational data to identify the main targets. Its experts were deployed both in the Netherlands and in Poland to support the national authorities on the spot.

    The investigation is still ongoing to try to find potential links to other European countries.