Tobacco corporations was stopped by Russian factories, the market is waiting for the shortage of cigarettes

Tobacco corporations was stopped by Russian factories, the market is waiting for the shortage of cigarettes Tobacco corporations was stopped by Russian factories, the market is waiting for the shortage of cigarettes
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the Tobacco companies, Japan Tobacco International, Philip Morris International and British American Tobacco PLC temporarily stopped its factories in Russia because of the restrictions that the government imposed to combat the spread of coronavirus. The continuation of the idle faces a shortage of cigarettes in the Russian market and even suspension of work for the week will affect the number of products in retail, they warned.

to Solve the problem would be the inclusion of tobacco products in the list of non-food commodities, according to representatives of tobacco companies. The list is mainly personal hygiene products, care for babies, gasoline, diesel oil and candles, reports “Interfax”.

Japan Tobacco International (JTI), the largest manufacturer of cigarettes in Russia, decided to stop the factory for a period of announced holidays of the so-called “Putin break” from 30 March to 3 April.

“This decision was due to the ambiguity of how various regulatory measures taken in the past week, and the definition of continuous production and non-business days, relate to each other, and also the fact that tobacco products were excluded from the list of non-food commodities”, – said the Director for work with state bodies “JTI Russia” Vasily Gruzdev.

According to him, the company takes measures to ensure an uninterrupted supply of products to consumers. “The supply of a product formed on all levels of the supply chain, however, future suspension of operations may lead to failures in the supply chain”, he said.

British American Tobacco (BAT) has also decided to suspend the running of his factory for production of cigarettes and tobacco sticks in St. Petersburg. “Tobacco products are excluded from the list of commodities. According to the government decision, the factory “BAT-SPb” has suspended its work on 5 April. However, we believe that the production of tobacco products must continue,” – said the Director of the BAHT on legal issues and unexplorative relations of subregion Russia, Central Asia, Belarus Yana Guskova.

the Decision to expand the list of commodities can be taken at the management level subjects, she said. “On the territory of Saint Petersburg has two factories that produce more than 50% of cigarettes in Russia. Our company has appealed to Governor Alexander Beglov with a request to include tobacco in the list of commodities and hopes for a fair decision in the interests of society, state and business,” said Guskova.

Philip Morris International (PMI) have also suspended work in its factory near St. Petersburg. “We were forced to temporarily suspend the operation of the factory JSC “Philip Morris Izhora” in the Leningrad region until April 3, in connection with the decree of the President of the Russian Federation and due to the fact that on March 29 the government has excluded tobacco products from the list of non-food commodities”, – said the Vice-President, corporate Affairs PMI affiliates in Russia Sergey Slipchenko.

While smokers can buy cigarettes. However, the exclusion of tobacco products from the list of non-food commodities and, consequently, the suspension of production for a longer period can lead to failure of contracts for the supply of products to meet the demand of the population and appearanceNIJ shortage of legitimate products, said Slipchenko. “This situation could trigger the explosive growth of the illegal market and lead to serious losses for the Federal budget due to the reduction in excise revenue”, he added.

Stop the largest Russian manufacturers of cigarettes can lead to a shortfall in budget revenues in the amount of 10 billion rubles in a week, says Yana Guskova.

“to Predict how much is enough available retail stocks of cigarettes impossible. BAT – multicategorical company, in the line which contains products of different brands, price categories and ways of consumption. Some types of products can last for a month, and some will end in less than a week,” she says.

it is also Important to note that the factory in St. Petersburg is the only production site “the BAT” in Russia and operates around the clock seven days a week. Distribution of tobacco products from Saint-Petersburg, Russia may take up to 20 days, given the size of our country. Despite the presence of trading stocks, stop production and sale of tobacco products in any case will lead to a jump in demand and deficit. “So even weekly simple factory will significantly affect the number of products on the shelves”, says Yana Guskova.

Cigarettes remain “a key product of daily demand for the 36 million Russians,” and one of the important factors to ensure an uninterrupted supply of the products and activities of companies “in terms of the current and upcoming restrictions could be the appropriate decision of the government,” said Vasily Gruzdev. One such solution could be the inclusion of tobacco products in the list of non-food commodities.

“We are ready to resume the factory at any time, if the resumption of activities will not be contrary to the current regulations,” said Slipchenko. In his wordsam, PMI has taken all necessary measures to protect employees production sites and offices.

PMI in Russia owns factory “Philip Morris Izhora” in the Leningrad region and its affiliate company “Philip Morris Kuban” in Krasnodar. Have BAT in RF two factory “BAT-SPb” in St.-Petersburg and “BAT-STF” in Saratov. At JTI in Russia five plants, including two factories of the finished product – “Petro” in St.-Petersburg and “the don tobacco” in Rostov-on-don, and three factories for processing of raw tobacco products: “John.T.And. Elec” in the Lipetsk region, “Cres Neva” in Leningrad region and “Ust Tobacco” in the Yaroslavl region.