Deficit of legal cigarettes in Ukraine: hostile strikes on tobacco plants threaten the budget

The Ukrainian market for tobacco products is on the brink of a systemic crisis. According to market sources, consumers will face a massive shortage of legal cigarettes by the beginning of December. The main reason is targeted enemy strikes on the logistical infrastructure and production facilities of key market players.

The state of the Big Four: stocks running out

Domestic production has halted, and import logistics are also under threat. Even batches imported from European factories are regularly lost due to attacks. The situation at the leading companies looks as follows:

• Imperial Brands: The Kyiv plant was destroyed on 10 September. According to market sources, all of the company's warehouse stocks have already been exhausted.
• JTI: Production in Kremenchuk was destroyed on 22 September. The company currently has stocks only until November, while new supplies from Europe are expected only by the end of December.
• Philip Morris: The main capital warehouses were lost back in July due to drone strikes. The main plant in Kharkiv has been closed since 2022. Currently, the company is operating on the edge of a deficit, trying to maintain minimal import volumes.
• British American Tobacco: The factory in Pryluky burned down on 7 September. The enterprise is running down the remaining stocks and avoiding large import supplies, as even the distribution of goods across different logistics centres does not protect against new fires.

New warehouse premises are burning down every week. For manufacturers, it has become more profitable to keep the market in a state of deficit than to risk large volumes that could be destroyed at any moment.

Blow to the budget: 177 billion hryvnias at risk

The enemy deliberately chose the tobacco industry as a priority target, as this poses a direct threat to the state's finances. In 2025, the industry paid approximately 177 billion UAH in taxes to the budget, accounting for 7% of the country's total tax revenues. These funds were fully directed to the needs of the front line.

Statistics for the seven months of 2026 record revenues of 76.4 billion hryvnias. The disruption of such payments is critical for state defence funding.

The shadow market as the main danger

The growing shadow market not only worsens the situation but also effectively helps the enemy. The network of shadow production and distribution channels for excise-free goods demonstrates high resilience to military actions, as it has no fixed objects that can be destroyed.

The main threat lies in the fact that the legal industry may be completely squeezed out by the grey market. Against the backdrop of constant strikes and the authorities' inability to effectively combat shadow schemes, the central offices of the Big Four will simply decide to wind down operations and exit the market.

If this happens, the state will lose not only the 30 billion hryvnias currently lost due to shadow schemes, but also 7% of total tax revenue generated by the legal sector.

Government reaction: deadlines have expired

Prime Minister Koretskyi outlined the tobacco industry as a priority area for de-shadowing and held a separate meeting with industry representatives and law enforcement officers. He instructed the security forces (the Bureau of Economic Security and the National Police) to develop a plan to combat the shadow market with a one-week deadline.

This deadline has already passed. It remains unknown whether the security structures understand the full depth of the risk: it is not just about the loss of tens of billions due to the shadow market, but about the possible complete disappearance of the legal tobacco industry from the Ukrainian market along with its tax revenues.