Tobacco in Hungary

Tobacco in 2024: The big picture

Tobacco in Hungary recorded positive retail volume and value growth in 2024, while the industry continued to undergo a transformation, following trends observed across the review period. One of the most significant trends is the ongoing volume decline for traditional cigarettes and fine-cut tobacco, offset by the increasing uptake of heated tobacco products. This shift reflects a broader consumer migration away from conventional smoking towards alternative nicotine delivery systems, driven by evolving consumer preferences, perceived health benefits, and intensive in-store marketing strategies by tobacco companies. As heated tobacco products become more widely accepted, manufacturers have expanded their portfolios, offering a variety of devices and consumables to cater to different consumer needs.

2024 key trends

Volume and value sales of tobacco rose in 2024, influenced by the development of alternative categories and the increasing popularity of heated tobacco. As demand for modern smoking solutions rises, along with demand for healthier alternatives and a growing variety of products, consumers are shifting from traditional cigarettes and smoking tobacco to heated tobacco and e-vapor products. Annual price increases driven by escalating taxation predominantly impact price-sensitive consumers. Furthermore, as overall prices rise, the distinctions between different price segments become increasingly blurred, contributing to a growing trend of price polarisation within tobacco.

Competitive landscape

Philip Morris Magyarország Kft was the leading company within tobacco overall in 2024, improving its volume share. The company produces the Marlboro, HEETS and TEREA brands, present in the cigarettes and heated tobacco categories. The company’s leading position is driven by its strategic transformation and innovative product development within the heated tobacco segment, most notably through the TEREA brand. At the same time, it continues to leverage a strong and diverse brand portfolio, including well-established local names such as Multifilter, alongside prominent international cigarette brands. In addition, Philip Morris Magyarország Kft emerged as the most dynamic player in 2024, further strengthening its position. This was largely driven by ongoing sales of TEREA and the continued expansion of its next-generation heated tobacco device, Iluma, which together contributed significantly to the company's overall growth and performance.

Retail developments

Food/drink/tobacco specialists was the leading distribution channel for tobacco products in Hungary in 2024, accounting for 100% of volume sales. This category exclusively comprises of National Tobacco Stores, the only retail outlets legally authorised to sell tobacco products in the country. Hungary's tobacco retail market is subject to strict regulation, with only licensed retailers permitted to operate. Since 1 July 2013, tobacco sales have been restricted to a limited number of concession-holding independent shops operating under the National Tobacco Store brand. By the end of 2024, approximately 5,050 National Tobacco Stores were in operation, though this number has been gradually declining at a marginal rate. In smaller settlements where no retailers applied for a concession, the government has issued special permits to around 640 additional outlets, primarily grocery shops or pubs, to ensure continued access to tobacco products in underserved areas. This reflects a pragmatic approach aimed at maintaining essential retail services in rural communities.

What next for tobacco?

Sales of tobacco are set to record a retail volume and value rise over the forecast period. Notable shifts are set to continue, influenced by changing consumer preferences, regulatory measures, economic factors and overall consumer sentiment. A notable trend will be the increasing adoption of novel tobacco and nicotine products. This surge indicates a growing consumer inclination toward alternatives perceived as less harmful than traditional cigarettes. Any further intensification of economic pressures, such as rising inflation affecting essential goods and household budgets, may prompt consumers to seek more affordable alternatives within the tobacco market. This shift could challenge the growing prevalence of heated tobacco products, which are generally positioned at a higher price point than traditional options.