Big Tobacco May Halt Investments in Egypt Following Sin Tax
Egyptian smokers, Big Tobacco has got your back.
In an exclusive report by Enterprise, an anonymous source at an internationally leading tobacco company stated that his company, in addition to two other prominent companies in the field, are considering holding off from investing in Egypt following the recently-imposed sin tax - which has hiked cigarette prices in Egypt by EGP 0.75.
The new tax was proposed by the government as part of its plan to launch a universal healthcare system, which the sin tax would partially fund - owing to the EGP 3 billion generated by the tax in revenue to the state. After the tax was imposed, Egypt's Eastern Tobacco company reduced the prices of the local brand Cleopatra by EGP 0.5; news which Enterprise described as a potential state monopoly over the tobacco market, which could possibly push foreign to pull out of the market.
The international company, from which the source spoke to Enterprise on condition of anonymity, had been looking to invest GBP 30 million in Egypt to launch a low-cost brand to compete with Cleopatra, however the new sin tax 'would make it impossible' for them to compete in the market.
Executives from international brands have held a meeting with Egypt's finance minister before the tax was imposed, in hopes of reaching a common ground and a new tax framework that would enable them to offer their products at competitive prices. According to Enterprise, however, the meetings didn't go so well.
The CEO of the state-owned Eastern Tobacco Company announced in a DMC interview with Osama Kamal that Egyptians consume a staggering 83 billion cigarettes annually, with daily consumption averaging at 280 million.
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