New TCRG research on tax and pricing in Ukraine

A new paper from the Tobacco Control Research Group investigates how the tobacco and nicotine industry responded to major tax reforms on heated tobacco products (HTPs) and e-cigarettes in Ukraine between 2019 and 2022. As one of the few countries to apply partially harmonised specific taxes on HTPs and cigarettes, Ukraine offers a unique setting to study pricing strategies.

Drawing on monthly brand-level retail price and sales data for cigarettes, HTPs and e-cigarettes, along with official tax records, the researchers assessed tax pass-through to consumers and industry net revenue retention across five product segments, showing how pricing strategies varied across product categories and over time.

This research is the first to provide a detailed, empirical assessment of industry pricing behaviour across both combustible cigarettes and newer nicotine and tobacco products in Ukraine – a country pursuing EU accession and tobacco tax harmonisation. It offers new insights into how companies protect profits by smoothing prices and exploiting product tax differentials.

Lead author Dr Sheikh explains:

Our findings reveal that the industry systematically overshifted taxes on premium cigarettes, HTPs, and e-cigarettes, while absorbing costs on economy cigarettes to retain market share. Price-smoothing tactics helped the industry avoid consumer price shocks and maintain profitability. Tobacco companies positioned HTPs as premium products alongside the premium cigarettes. When Ukraine revised its tax policy, retail prices in the market didn’t change, it just resulted in industry making less profits. This suggests that governments imposing lower taxes on HTPs are only succeeding in boosting industry profit margins while forgoing potential tax revenue. In effect, the lower tax rates effectively act as an indirect subsidy to the industry. Policymakers must close these gaps to protect public health and ensure fully harmonised taxation.

Read the paper:

Examining cigarette, heated tobacco, and e-cigarette market pricing and tax passthrough in Ukraine during the 2019-2022 tax reforms. Z.D. Sheikh, J.B. Branston, L. Olefir, Tobacco Control, Published Online First: 14th May 2025, doi: 10.1136/tc-2025-059290

See also the Tobacco Tactics pages:

Tobacco Industry Pricing Strategies

The Price We Pay: Six Industry Pricing Strategies That Undermine Life-Saving Tobacco Taxes

The Tobacco Industry and Tax

And other recent TCRG research in the same area:

How has the tobacco industry passed tax changes through to consumers in 12 sub-Saharan African countries?, Z.D. Sheikh, J.R. Branston, K. van der Zee, A.B. Gilmore, Tobacco Control 2025;34:48-58, doi: 10.1136/tc-2023-058054

Tobacco industry pricing strategies for single cigarettes and multistick packs after excise tax increases in Colombia, Z.D. Sheikh, J.R. Branston, B.A. Llorente, N. Maldonado, A.B. Gilmore, Tobacco Control 2024;33:59-66, doi: 10.1136/tobaccocontrol-2022-057333

Tobacco industry pricing strategies in response to excise tax policies: a systematic review, Z.D. Sheikh, J.R. Branston, A.B. Gilmore, Tobacco Control 2023;32:239-250, doi: 10.1136/tobaccocontrol-2021-056630

Featured image: Number 10 | CC BY-NC-ND 2.0