Market evolution: Cigarettes (CN 240220) — 2015–2025

Introduction

This report examines the evolution of European Union trade in cigarettes containing tobacco (Customs code 240220) over the period 2015–2025. The EU has long been a major net exporter of cigarettes, and the data reveal a decade characterised by three dominant dynamics: a sharp contraction in domestic production and export volumes, a profound realignment of trade partners — shaped in part by Brexit and geopolitical shifts — and a marked rise in unit prices alongside a deepening of the EU's export orientation. Imports, while smaller in scale, also underwent dramatic structural changes, particularly regarding source countries.

The product under review covers two sub-headings: cigarettes containing tobacco excluding cloves (24022090), which account for virtually the entirety of trade, and cigarettes containing tobacco and cloves (24022010), a negligible segment by volume and value.

1. A Decade of Contraction: Production and Export Volumes in Steady Decline

EU cigarette production has fallen by a third in volume and nearly two-thirds in value

The most fundamental structural trend in the EU cigarette market is the sustained contraction of domestic production. Between 2015 and 2025, EU production volume declined from approximately 802 billion items to 525 billion items — a drop of 34.5%. The contraction in production value was even steeper, falling from €14.8 billion to €5.1 billion, a decline of 65.4%. This widening gap between quantity and value suggests that not only are fewer cigarettes being produced, but average production values have also been under significant downward pressure.

This production decline is consistent with broader public-health-driven regulatory tightening across EU member states, declining smoking prevalence, and the growing competition from alternative nicotine products.

Export volumes have contracted even more sharply than production

EU exports of cigarettes to non-EU countries tell a similar story of volume erosion. By mass, exports fell from 138,497 tonnes in 2015 to 79,164 tonnes in 2025, a decline of 42.8%. In supplementary-unit terms (thousand items), the drop was 37.3%, from 125.6 billion to 78.8 billion items. Export value fell more modestly — by 16.9%, from €2.54 billion to €2.11 billion — thanks to the offsetting effect of rising unit prices.

The gap between the steep volume decline and the flatter value decline reflects the 45.4% increase in export unit prices (EUR per tonne) over the period. In other words, the EU is shipping far fewer cigarettes but commanding significantly higher prices per unit.

Germany's export collapse and Poland's rise have reshaped the EU's internal production geography

The decline in export volumes was not evenly distributed across EU member states. Germany, by far the largest exporter in 2015 (€1.31 billion), saw its exports collapse by 67.9% to just €420 million by 2025. In contrast, Poland surged from €181 million to €562 million (+210.7%), effectively becoming the EU's leading cigarette exporter by the end of the period. Lithuania also experienced explosive growth (+426.4%), reaching €189 million. This eastward shift in the EU's export base likely reflects lower production costs, the consolidation of manufacturing in Central and Eastern Europe, and favourable logistics for serving non-EU markets.

2. Geographic Realignments: Brexit, Western Balkan Suppliers, and Shifting Export Destinations

Imports have pivoted dramatically toward Türkiye and Serbia, while the UK has vanished as a supplier

EU imports of cigarettes, though much smaller than exports, underwent a striking geographic transformation. Total import value rose 50.5%, from €146 million to €220 million, while import volume grew 15.4% (from 8,036 to 9,272 tonnes). However, the composition of import sources changed radically.

The United Kingdom was the EU's dominant cigarette import partner in 2015, supplying €113 million — by far the largest source. By 2025, UK imports had collapsed to just €0.7 million, a decline of 99.4%. This is a direct and unambiguous consequence of Brexit: when the UK left the EU customs union at the beginning of 2021, shipments that were previously intra-EU movements became third-country imports subject to customs duties, regulatory barriers, and border formalities. The data show the decline accelerating sharply from 2020 onward.

In the void left by the UK, two Western Balkan countries emerged as dominant suppliers:

Türkiye and Serbia together now supply over €189 million of the EU's €220 million in cigarette imports — a combined share of approximately 86%. This suggests that cigarette manufacturing has been significantly relocated or expanded in these countries, likely driven by lower labour costs, proximity to the EU market, and — in the case of Serbia — the EU-Serbia Stabilisation and Association Agreement providing preferential trade terms. North Macedonia also emerged as a meaningful supplier (+648%), reinforcing the Western Balkans trend.

Meanwhile, Russia went from €5.7 million to virtually zero (−99.9%), consistent with the sanctions and trade restrictions imposed following Russia's invasion of Ukraine.

At the EU-member-state level, the import reconfiguration was equally dramatic. Austria's imports surged from €0.1 million to €56 million (+42,337%), Romania's from €8.6 million to €95 million (+1,006%), and Bulgaria's from €1.1 million to €23 million (+2,067%). By contrast, traditional importers like France (−63.8%), Spain (−100%), and Ireland (−98.7%) saw their imports collapse. This geographic concentration of new import flows in Austria, Romania, and Bulgaria likely reflects their proximity to the Western Balkan supply chain.

Export destinations have also undergone major shifts, with the Middle East and Japan declining sharply

On the export side, the EU's traditional non-European markets have weakened considerably:

Saudi Arabia and the UAE were the EU's second- and third-largest export markets in 2015, together worth nearly €1 billion. By 2025, their combined share had fallen to just €208 million, a decline of approximately 80%. This likely reflects the growth of domestic cigarette manufacturing in the Gulf region, stricter tobacco regulations, and possibly shifts in global brand strategies by multinational tobacco companies. Japan showed a near-total collapse (−96.1%), dropping from €76 million to just €3 million — potentially linked to Japan's accelerated adoption of heated tobacco products and tighter import regulations.

The United Kingdom remained the EU's single largest export destination throughout the period, with relatively stable value (+6.0%), though its share of total EU cigarette exports grew substantially from roughly 10% to 13% simply because other markets contracted. Russia was a notable exception to the declining trend, with EU exports surging 234.2% to €118 million — a paradoxical increase that may reflect pre-sanctions stockpiling, intermediary trade flows, or reclassification effects.

Import concentration has fallen, reflecting a more diversified — but geographically narrower — supply base

The Herfindahl-Hirschman Index (HHI) for import concentration by value fell from 6,081 in 2015 to 4,063 in 2025, a decline of 33.2%. This might seem paradoxical given that two countries (Türkiye and Serbia) now dominate imports. However, in 2015, the UK alone accounted for an overwhelming share, making the concentration extremely high. The redistribution across multiple Balkan and other suppliers, even if concentrated, lowered the overall HHI. Export concentration also declined, from an HHI of 1,135 to 557 (−50.9%), reflecting a broader diversification of EU export destinations.

3. Rising Unit Prices, Deepening Export Orientation, and Divergent Specialisation Patterns

Unit prices have risen sharply across both exports and imports

One of the most consistent trends in the data is the sustained increase in unit prices for cigarettes in EU trade:

These increases are notable in both absolute terms and relative to general inflation. Several factors likely contribute: rising EU tobacco excise duties (which are embedded in reported customs values), a compositional shift toward higher-value premium brands, inflationary pressures, and the decline of lower-price-volume trade flows. The divergence between the mass-based and item-based price measures also suggests a possible decline in average cigarette weight, which could reflect changes in product specifications (e.g., thinner cigarettes, different filter materials).

Import prices for the clove-cigarette sub-segment (24022010) show extreme volatility, with prices per 1,000 items ranging from €7.91 in 2024 to €382,826 in 2025 — a figure that almost certainly reflects very small volumes producing erratic per-unit calculations rather than genuine market prices.

The EU has become dramatically more export-oriented

The export propensity of the EU's cigarette sector — measured as the share of total production value accounted for by extra-EU exports — rose from 5.9% in 2015 to 40.8% in 2025, an increase of 595%. Trade intensity (the combined export and import share of production) rose from 8.8% to 42.4% (+383%).

The net import reliance metric confirms this picture: the negative values indicate the EU is a net exporter, and the figure deepened from −2.8% to −61.3% (minimum: −82.1% in an intermediate year). This means that the EU's cigarette trade surplus has grown enormously relative to its domestic production. The paradox — that production has fallen while the export share of production has surged — is explained by the fact that domestic consumption has declined even faster than production, leaving a growing share of remaining output destined for export markets.

Specialisation is concentrated in Central and Eastern Europe, while major Western economies have near-zero involvement

The Revealed Symmetric Comparative Advantage (RSCA) analysis for 2025 reveals a stark divide within the EU:

Lithuania, Portugal, Poland, Romania, and Greece are revealed as the EU's specialised cigarette exporters. Poland alone accounts for 40.7% of EU production by volume, making it the sectoral heavyweight. By contrast, major economies like Italy (RSCA of −1.000, effectively zero export specialisation), Denmark, France, and Sweden have negligible production shares and near-zero comparative advantage. These countries' cigarette markets are overwhelmingly supplied by domestic consumption-oriented production or by imports from other EU member states (not captured in extra-EU trade data).

Volatility in key trade relationships signals structural fragility

The coefficient of variation (CV) analysis reveals which trade relationships have been most volatile. On the import side, China (CV 1.76), North Macedonia (CV 1.35), and the UK (CV 1.24) show the highest volatility, consistent with their boom-and-bust trajectories. On the export side, Japan (CV 1.09) and the UAE (CV 0.78) were the most volatile. Supply shocks were detected in export-price flows to Japan (2018, +154.3% abnormal shift), Kuwait (2020, +59.7%), and Libya (2022, +22.1%), suggesting episodic disruptions in these markets possibly linked to regulatory changes, supply-chain interruptions, or geopolitical instability.

Conclusion

The EU cigarette market (CN 240220) has undergone a profound structural transformation between 2015 and 2025. Domestic production declined by a third in volume and nearly two-thirds in value, while export volumes fell by over 40%. Yet the EU remains a major net exporter, with its export propensity rising to over 40% of production as domestic consumption contracted even faster.

The geographic landscape of EU cigarette trade has been redrawn. On the import side, the UK's departure from the EU single market removed it almost entirely as a supplier, while Türkiye and Serbia rose to dominate the import base — a shift channelled primarily through Austria, Romania, and Bulgaria. On the export side, the Middle Eastern and Japanese markets that once anchored EU exports have contracted dramatically, leaving the United Kingdom as the single most important destination. Within the EU, Germany's once-dominant export position has eroded sharply, ceding ground to Poland and Lithuania.

Against a backdrop of declining volumes, unit prices have risen substantially — by 30–45% depending on the measure — reflecting regulatory cost pressures and likely compositional shifts toward higher-value products. The EU's cigarette trade, while smaller in absolute terms than a decade ago, is now more price-intensive, more export-oriented, and geographically concentrated in a narrower set of bilateral relationships than it was at the start of the period.