Azerbaijan needs to increase tobacco production competitiveness

Business Materials 15 May 2018 15:55 (UTC +04:00)

Baku, Azerbaijan, May 15

By Ilkin Shafiyev - Trend:

Azerbaijan needs to increase the share of local tobacco in the domestic production of cigarettes, as well as increase export of these products, a source in Azerbaijan’s tobacco market told Trend.

Presently, about 85 percent of the ready-made tobacco products global market is controlled by several transnational companies, therefore it will be difficult for Azerbaijani producers to compete abroad in this field, according to the sources. Nevertheless, there are opportunities to increase production and export of dry tobacco, the source said.

“The tobacco industry, just like the cigarette industry, is heavily monopolized,” the source noted.”There are 6-7 companies that sell or resell tobacco in the world. These companies themselves grow tobacco, mainly in Latin America, African countries, and partly in Asia. They also control about 80 percent of the manufacture of finished tobacco products. The only way out is to increase the use of Azerbaijani tobacco in the country and gradually enter the nearby foreign markets. Our tobacco is noticeably lower in price compared to the price of tobacco of global brands. Nevertheless, it will be easier to compete in this sphere than, for example, in the production of cigarettes.”

In this regard, it is necessary to ensure the application of new technologies and grow new varieties of tobacco, as well as reduce the cost of production, the source added..

“If we agree with the biggest companies, naturally they will dictate their prices,” the source said. “It will be monopolistically low prices, nevertheless, somehow it is necessary to get involved in the international chain of the tobacco industry.”

In January-March 2018, Azerbaijan exported tobacco and its industrial substitutes worth $3.74 million and imported tobacco and its industrial substitutes worth $23.6 million, according to Azerbaijan’s State Customs Committee. Exports decreased by 9.78 percent Compared to the same period in 2017, while imports decreased by approximately 22 percent.


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