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Number of Iran’s Tobacco Companies on the Rise

Number of Iran’s Tobacco Companies on the RiseNumber of Iran’s Tobacco Companies on the Rise

Iran has 39 tobacco and 23 cigarette production companies. 
The number of cigarette manufacturers in Iran increased from seven companies with an annual output of 29 billion cigarettes in the year ending March 2015 to 23 companies with an annual output of 55 billion in the year ending March 2020. 
According to a report by the Persian economic daily Donya-e-Eqtesad, citing statistics by Industries Ministry, two leading international manufacturers of cigarettes, namely British American Tobacco and Japan Tobacco International accounted for more than 60% of total cigarette production in Iran last year (March 2019-20). 
The report puts the total turnover of tobacco industry in Iran at 300 trillion rials ($1 billion) last year. 

 

Decline in Iran's Oldest Tobacco Company's Production 

Misguided policies regarding the tobacco industry, restrictive regulations and lack of thoughtful planning have reduced the output of Iranian Tobacco Company in recent years, says a member of the board of directors of the company. 
“ITC’s production last year [March 2019-20] reached around six billion cigarettes compared with nine billion in the year ending March 2019 and 12 billion in the year ending March 2018," Payam Hamedani-Mojarrad was also quoted as saying by ISNA.
The oldest Iranian tobacco company has 81 production lines and is capable of producing 40 billion cigarettes annually to meet 50% of market demand. However, according to the official, the government has yet to decide whether it is willing to improve its presence in tobacco industry—one of the top five high-yielding industries in the world.
“ITC purchases tobacco from 15,000 farmers and has created 20,000 direct and indirect jobs that could increase to 100,000 if the government were to create the right climate,” he said. 
Noting that imports account for 60-70% of 80 of the raw materials needed in cigarette production, Hamedani-Mojarrad said, “Petrochemical and other domestic industries have the potential to supply much of the raw materials, including essences, cigarette paper and packaging materials of the products.” 
Iranian Tobacco Company was established in 1937 and totally owned by the government before 2013 when part of its shares was handed over to Iran Steel Pension Fund.

 

Production, Export, Smuggling Data

Domestic cigarette production stood at 19.79 billion during the five months to Aug. 21, registering a year-on-year 12.4% decline, the Ministry of Industries, Mining and Trade latest report shows. 
An estimated 27.08 billion cigarettes were smoked during the period, registering no significant year-on-year change. 
Cigarette exports stood at 71 million during the period, indicating a 184% increase YOY. 
The report also shows a total of 7.36 billion cigarettes were smuggled into Iran during the five months, indicating a 63.2% increase compared with the corresponding period of last year.
The government has banned the import of cigarettes to Iran for a long time now.
A total of 54.8 billion cigarettes were produced in the last fiscal year (March 2019-20), indicating a 13.7% growth compared with the year before. 
Cigarette exports saw a 2.7% increase to stand at 154 million.
Notably, Jordan and Austria made to the list of Iran’s export destinations for cigarettes for the first time in the year ending March 2020, according to Ataollah Maroufkhani, the head of Ministry of Industries, Mining and Trade affiliate, the Iranian Tobacco Planning and Supervision Center. 
The Ministry of Industries, Mining and Trade estimates that 10.03 billion cigarettes were smuggled into Iran in the last fiscal year, in view of the 65 billion cigarettes smoked in the country during the period, which registered a year-on-year decline of 39.2%. 
Tobacco exports stood at 2,374 tons and posted a surge of 161.3% while 21 cigarette and 39 tobacco factories were active last year compared with 20 cigarette and 33 operational tobacco factories in the year before, ISNA reported. 
The government earned 17,023 billion rials (about $60 million) from tax on cigarette consumption in the year ending March 2020. 
The figure indicates a 50% rise compared with the year before. 
Tax on cigarettes sales increased by 22.8% to reach 7,868 billion rials ($27 million) last year compared with 6,406 billion rials ($22 million) in the fiscal 2018-19. 

 

Tobacco Inflation at 26%

The average goods and services Consumer Price Index for "tobacco" in the 12-month period ending Sept. 21, which marks the end of the sixth Iranian month, increased by 26% compared with the corresponding period of last year.
The CPI of the group, among 12 groups of the basket of consumer goods and services purchased by households, stood at 372.3 in in the period, indicating a 1.4% rise compared with the previous month. 
The tobacco index, which has minimum impact on total inflation rate with a coefficient of 0.59%, registered a year-on-year increase of 33.7%, according to the Statistical Center of Iran.

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