Egyptian government addresses cigarette supply shortage

Fatma Salah
4 Min Read

Eastern Company, the state-run producer of cigarettes in Egypt, plans to raise daily distribution rates to contractors by 20-30% to 150 million cigarettes daily next week, to solve the current cigarette supply crisis in the country.

This came after the government intervened to solve the problem of the shortage of cigarettes and the doubling of their prices in the market. According to Hani Aman, the managing director and CEO of the company, the new distribution rates after the increase are equivalent to between 7.5 million packs per day, after the government increased orders for the supply of raw materials to increase the volume of daily production in an effort to control the prices of cigarettes.

Aman told Daily News Egypt that the company has already begun to raise production in preparation for increasing distribution rates to contractors registered with the regulatory bodies.

Mostafa Madbouly, Prime Minister, held a meeting on Monday, to review the position of the Eastern Company’s work activity, the available production volume of the company’s various products, and the work plans and development programs being implemented to increase the volume of production, in order to achieve balance in the markets for its various products. 

The meeting dealt with providing the raw materials necessary for the manufacturing operations of the company’s various products, especially cigarettes, explaining that the supply orders for raw materials have been increased, which contributes to increasing the daily production volume, and providing more supply in an effort to stabilize the market and control prices for the commodity.

Aman added that increasing distribution rates will contribute to covering demand, in addition to eliminating high prices on the black market and stabilizing the cigarette market, which is in the interest of the consumer and prevents stockpiling by some merchants.

Regarding the company’s intention to increase the prices of its products in the coming period, Aman said that the tax is deducted from the selling price to the consumer, which amounts to about EGP 24, explaining that there is no price increase except through a legislative amendment to the cigarette tax.

He said that the price is available through the “QR code” on cigarette packs, explaining that the price of Cleopatra cigarettes is a reference for the market in Egypt, of which the company owns 75%, and that the price increases that occur in the market are not justified in any way.

He stressed that the regulatory agencies are constantly communicating to solve the crisis, and take the necessary measures to maintain the price of cigarettes for the consumer.

Domestic cigarette prices more than doubled, to record about EGP 56, compared to the official price of EGP 24 for consumers, while Philip Morris products, such as LM cigarettes, rose to between EGP 60 and EGP 70, compared to EGP 42, the official price, and Marlboro and Merritt at EGP 80, compared to EGP 59 and EGP 64, respectively.

Eastern Company achieved total revenues of EGP 54.827bn for the nine-month period ending in March 2023, compared to EGP 51.466bn in the same period of the last fiscal year.

Net sales amounted to EGP 14.609bn, compared to EGP 12.781bn in the same comparison period, with a growth rate of 14%, while the gross profit margin reached about 47%, compared to 45% during the comparison period.

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