Austria’s new tobacco market share increased to 7%

In 2023, Austria’s tobacco tax reached 2.1 billion euros, but its fiscal revenues have stagnated, calling for future reforms. The market share of traditional tobacco has declined, while the market share of alternatives such as heated cigarette products has increased, accounting for 7% of the market share and continuing to grow. 76% of the price of a pack of cigarettes is handed over to the state, with an average price of 5.77 euros, which is more expensive than neighboring countries.


According to Austrian media Vienna, the Japanese Cigarette International Austrian Enterprise (JTIAustria) press release pointed out that in 2023, the Austrian finance Ministry will receive about 2.1 billion euros in revenue from tobacco taxes, including 2.7 billion euros in value-added tax. Although tobacco prices rose by about 30 euro cents per pack last year, fiscal revenues remained stagnant at the levels of the previous two years.


Ralf WolfgangLothert, member of JTI Austria, said that despite the rapid rise in cigarette prices, fiscal revenues remained at a stable level, which shows the need for reform in the coming years.


The market share of traditional cigarettes is declining, but new cigarettes such as heated cigarette products are on the rise. At present, the market share is about 7% and still rising. Austria has a relatively small market share for non-cigarette alternatives such as tobacco tar pockets or vapes. These alternatives have a lower tax burden than traditional cigarettes, resulting in tens of millions of euros in lost tax revenue each year.


According to JTI, the traditional tobacco market has remained stable over the past year, with annual sales reaching 12.6 billion sticks, including some cigarettes that are not taxed in Austria. According to Rosshennessy, president of JTI Austria, this reflects a “modest decline in sales” compared to 2022, with tobacco prices becoming more expensive for consumers. The average price rose from 5.502 euros to 5.77 euros.


However, with annual sales of 3.8 billion euros, the average revenue of tobacco shops has increased. In addition, the economic profit margin increased by 8.2% to 1.91 million euros.


In the past year, 11.6 percent of cigarettes were smuggled in. The tax loss in 2023 is about €285 million because some cigarettes are not taxed in Austria. For manufacturers and merchants, the losses amounted to about 91 million euros.


Of the price of a pack of cigarettes in Austria, 76% is paid to the state as tobacco tax, and the rest is distributed among manufacturers, wholesalers, and cigarette manufacturers. The average price of 5.77 euros per pack in Austria makes cigarettes more expensive in Austria than in neighboring Slovakia and Slovenia (4.60 euros per pack), Hungary (5.57 euros) and Italy (5.20 euros). Cigarettes cost more in Germany (7.00 euros), Switzerland (8.71 euros), and the Czech Republic (5.84 euros).