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Tag: Ukraine

  • Ukraine Conducts 70 Raids, Busts Illegal Vape Liquid Operation

    Ukraine Conducts 70 Raids, Busts Illegal Vape Liquid Operation

    The Office of the Prosecutor General of Ukraine and the Bureau of Economic Security of Ukraine have dismantled a large-scale illegal production and distribution network for e-cigarette liquids operating since 2023, Prosecutor General Ruslan Kravchenko said. Authorities allege the group manufactured and sold nicotine mixtures, including non-tobacco flavors banned in Ukraine, through storefronts and online channels with more than 200 people involved.

    Over 70 simultaneous searches across Kyiv and five regions seized flavorings, base liquids, cartridges, pod systems, production equipment, $70,000 in cash, and records, with total assets valued at about UAH 30 million ($690,000). Illegal kiosks linked to the network were dismantled, assets are to be frozen, and further charges are being prepared as investigators map the full network.

  • PMI to Double Zyn Investment in Ukraine

    PMI to Double Zyn Investment in Ukraine

    Philip Morris International said it plans to invest $10 million in 2026 to expand the nicotine pouch category in Ukraine and launch a new line of Zyn, following a $5 million investment in 2025. According to Interfax Ukraine, the company said funds will support portfolio expansion, infrastructure, and adult consumer awareness. The new “dry” pouches contain no water or glycerin, are smaller, less flavored, and range from 1.5 mg to 6 mg nicotine across nine SKUs. Initial supply will be imported from Sweden.

    The company estimates nicotine pouches in Ukraine could grow 20% annually. PMI cited Zyn’s U.S. marketing authorization from the U.S. Food and Drug Administration as supporting further investment. PMI reported that smoke-free products were available in 105 markets at the end of 2025, used by 43 million adult consumers, and accounted for 41.5% of net revenue.

  • Ukraine Moves to Ban Nicotine Pouch Sales to Minors

    Ukraine Moves to Ban Nicotine Pouch Sales to Minors

    Ukraine is preparing to tighten regulation of nicotine pouches through draft law No. 14110-d, which would ban their sale to minors and limit advertising, according to Mykhailo Radutskyi, head of the parliamentary health committee. He said current anti-tobacco laws, aligned with European directives, do not adequately cover newer nicotine products such as pouches and snus, leaving gaps in rules on sales and promotion.

    The proposal, developed by the health committee of the Verkhovna Rada, also addresses broader issues, including enforcement against e-cigarette components entering the market, and pending requirements for larger health warnings on cigarette packs. Radutskyi cited rising tobacco use, particularly among youth, as a key reason to update the legislation.

  • PMI Director: Ukraine’s Flavor Ban ‘Largely Ineffective’

    PMI Director: Ukraine’s Flavor Ban ‘Largely Ineffective’

    The ban on flavoring and aromatic additives in electronic cigarettes in Ukraine, introduced by the Verkhovna Rada in July 2024, has proven largely ineffective due to a lack of enforcement, according to Mykhailo Polyakov, Deputy General Director for Corporate Relations at Philip Morris Ukraine. Speaking at the “Dialogues with NV” event on European integration, Polyakov said illegal vape shops remain widespread, with nine out of 10 shopping centers in Kyiv hosting such outlets. Despite the law formally prohibiting flavored e-cigarettes, no regulatory or law enforcement bodies are actively ensuring compliance, rendering the ban largely symbolic.

    Polyakov also highlighted broader issues in the tobacco sector, pointing out that while parliament has adopted legislative measures intended to curb the illegal market — such as tax posts, video surveillance, minimum price regulations, and production tracking — these measures are often circumvented. Illegal operations exploit gaps in monitoring, opening workshops outside regulated areas, and mislabeling products to avoid taxes or minimum price rules. He expressed hope that international partners, including the IMF, will help strengthen enforcement and ensure that legitimate companies can operate fairly while illegal operators are held accountable.

  • Ukraine’s Illegal E-Cigarette Market Costs $180M in Taxes

    Ukraine’s Illegal E-Cigarette Market Costs $180M in Taxes

    Ukraine’s e-cigarette market is almost entirely illegal, with the shadow market accounting for 93% of consumption, according to Mykola Pasichnyi, professor at the Kyiv National University of Trade and Economics. About 40% of vaping liquids are smuggled, while 60% is counterfeit and locally produced, he said.

    The illicit trade causes the government to lose an estimated 7.5 billion UAH ($180 million) annually in taxes, including excise, VAT, and local levies. Pasichnyi warned that combating this requires stronger enforcement by customs, border guards, and tax authorities, along with dedicated funding.

    Despite the scale of the problem, Ukraine’s draft 2026 budget allocates only an additional 13,500 UAH ($324) for the Bureau of Economic Security and none for customs reform, raising concerns over government priorities. Experts say urgent action is needed to regulate the market, recapture lost revenue, and curb the illegal trade.

  • PMI Ukraine Running at Full Capacity

    PMI Ukraine Running at Full Capacity

    Philip Morris Ukraine is considering exporting cigarettes manufactured at its newly built factory in the Lviv region, company CEO Maksym Barabash said during a roundtable discussion on Ukraine’s economic recovery. Ukraine Business News (UBN) said the PMI factory in Kharkiv, which closed at the outbreak of war with Russia, produced 20 billion cigarettes annually, 50% of which were exported, including to Japan.

    By launching a new $30 million factory in the Lviv region, the company sees the potential to resume exports to geographically close countries. The new factory in the Lviv region opened in May 2024 and features five production lines that this year reached their planned capacity of 10 billion cigarettes per year. This factory has become an important part of the company’s supply chain in Ukraine.

    Philip Morris Ukraine has been active in the Ukrainian market since 1994 and has invested over $750 million in the Ukrainian economy during this time, according to UBN.

  • JT Not Adjusting Russian Business

    JT Not Adjusting Russian Business

    In a statement issued to This Week in Asia, a Japan Tobacco (JT) official said: “As announced in early 2022, the JT Group has suspended all new investments and marketing activities in Russia. At present, the group continues its manufacturing and sales operations in the country in full compliance with all applicable regulations, including but not limited to economic sanctions and export controls. We continue to closely monitor legislative developments as well as the situation on the ground and review our options.”

    JT announcing that it was not pulling out of the lucrative Russian market makes news as the Ukrainian government continues its efforts to get some of the world’s largest companies to exit its combative neighbor. A Ukrainian report said JT contributed $182.3 million in taxes to the Russian government in 2023, fourth among taxpaying companies behind only Austria’s Raiffeisen Bank International ($491 million), China’s Chery Automobile, and Philip Morris, the world’s leading tobacco company.

    International companies that did not exit the Russian market immediately after the invasion of Ukraine began but later pulled out from bad press include Heineken, Citigroup, and Kraft-Heinz.

    JT, which is still one-third owned by the government, faces minimal criticism in Japanese media and as a result, the public – which is strongly supportive of Ukraine – is offering few objections.

    “There has been no comment from the government, no pushback from the public, and nothing in the media,” said James Brown, a professor of international relations at the Tokyo campus of Temple University who specializes in Russian affairs. “So the sense at [JT] headquarters appears to be ‘why should we walk away from it?’

    “The position in Japan was that if being there was not explicitly sanctioned, then it was fine to carry on. And that meant it was not a problem for the company, which was open about what it was doing.”

    In May 2024, Japan Tobacco CEO Masamichi Terabatake made that stance clear when he told the Financial Times that the company’s supply chains had been adjusted to meet international sanctions and that it would remain active in Russia to protect investors’ interests.

    “If worse comes to worst, there is even the risk of a shareholder lawsuit if we were to discontinue a business that we are able to continue,” he said.

  • PMI Describes Difficulties of Ukraine Production

    PMI Describes Difficulties of Ukraine Production

    Image: Filipp

    The realities of war make it cheaper for Philip Morris International Ukraine to import cigarettes from Poland than to manufacture them domestically, reports Interfax-Ukraine, citing comments made by PMI Ukraine Deputy General Director for Corporate Relations Mykhailo Poliakov during a seminar devoted to business and the ongoing conflict with Russia.

    PMI opened a cigarette factory in the Lviv region in May 2024 and recently compared the production costs of its new facility with that of its factory across the border, in Krakow, Poland.

    Due to the war, PMI’s Ukrainian operation must contend with higher rates of employee absenteeism. In addition, the Lviv facility is forced to cease operations during air raids. Frequent power failures add to the production cost, as the local grid was not designed to accommodate the large number of enterprises that have relocated to the region after the start of the conflict. Curfews too pose challenges for PMI’s workforce.

    The combination of these factors makes it 10 percent cheaper for PMI to produce cigarettes in Poland and bring them to Ukraine.

    Since starting operations in Ukraine in 1994, PMI has invested more than $700 in the country. After Russia’s 2022 invasion, the multinational suspended operations at its factory in the Kharkiv region and started importing products from PMI factories outside the country. It also temporarily licensed the production of some PMI brands to another multinational factory in Ukraine.

    In 2022, due to the war, PMI reduced shipments to Ukraine by 30.1 percent to 11.07 billion cigarettes and tobacco sticks, but in 2023, it managed to increase shipments of finished products by 8.4 percent, including 14.9 percent in the fourth quarter. In October last year, the company reported the restoration of its share in the Ukrainian market to 24 percent after falling to 14 percent from 28.5 percent in the first months after the Russian invasion.

    PMI has invested $30 million in its Lviv factory. Eventually, the factory will have five production lines. The first was launched in May, and four more will be put into operation by the end of 2024, which will bring the factory’s production capacity to 10 billion cigarettes per year.

  • Illicit Cigarette Market Deflates in Ukraine

    Illicit Cigarette Market Deflates in Ukraine

    Photo: IvanSemenovych

    The share of illicit products in Ukraine’s tobacco market dropped to 14.6 percent in July, down from 19.1 percent at the start of the year, reports UNN, citing data from the “Monitoring of the illegal trade in tobacco products in Ukraine” study.

    According to Kantar Ukraine, the state misses out on an estimated UAH23 billion ($556.01 million) in tax income as a result of duty-avoiding tobacco. The volume of the illicit cigarette market in Ukraine is estimated at 6.65 billion units.

    Oleksandr Ruvin, director of the Kyiv Scientific Research Institute of Forensic Expertise, said that despite recent progress, efforts to combat the illicit cigarette trade were not as effective as they could be.

    “At one time, we had an idea to create a thematic register of manufacturers. The State Tax Service provided us with a list of companies licensed to sell tobacco products—more than 50 representatives. The companies were supposed to provide us with reference product samples. We received some of the information, but this work is not being used as effectively as it could be,” he was quoted as saying.

  • PMI Opens Factory in Ukraine’s Lviv Region

    PMI Opens Factory in Ukraine’s Lviv Region

    Photo: Vitezslav Vylicil

    Philip Morris International opened a $30 million cigarette factory in Ukraine’s Lviv region, creating 250 jobs, reports Interfax.

    According to a company press release, the factory will have five production lines. The first started operating in May, the second should be launched in June and the rest before the end of the year, bringing the factory’s annual production capacity to 10 billion cigarettes, enough to meet the Ukrainian demand.

    PMI has no plans to export from the facility, which currently employs about 100 people from the company’s Kharkiv factory, which was mothballed in the wake of Russia’s 2022 military invasion.

    PMI has invested about $750 million in Ukraine since entering the market in 1994.

    Before opening the Lviv facility, PMI supplied to Ukraine from eight factories outside the country.

    The company reduced shipments to Ukraine by 30.1 percent to 11.07 billion cigarettes and heated-tobacco units in 2022. In 2023, it increased shipments to the country by 8.4 percent.

    The cigarette manufacturer controls almost a quarter of the Ukrainian cigarette market.