The tobacco market in Georgia: Landscape study

This landscape study maps Georgia’s tobacco market in the 2006-2024 period, covering production and trade, consumption volumes, price dynamics, tax structure, affordability and fiscal outcomes. Using official series from the Ministry of Finance, the Revenue Service and the National Statistics Office of Georgia (Geostat), we reconstruct the legal market size for cigarettes, heated tobacco products (HTPs), e-liquids and roll-your-own (RYO) tobacco in addition to tracking policy shifts affecting demand. Consumption fell from a peak of 555 million packs in 2012 to 365.8 million packs in 2023, largely following excise increases and broader tobacco-control measures (e.g. smoke-free laws, ad bans and more prominent warnings). Since 2019, however, unchanged specific and ad valorem rates have eroded in real terms amid income growth and inflation, raising affordability. Market composition in 2023 was dominated by conventional cigarettes (80%), followed by RYO tobacco (15%) and HTPs (5%), and e-cigarette use was expanding rapidly. An error correction model yields a long-run price elasticity near -0.6 and an income elasticity of 0.63-0.81, indicating that excise tax increases are an effective tool for reducing tobacco consumption, particularly when adjusted for inflation and income growth.

Keywords: Excise, Taxation, Tobacco, Elasticity

JEL classification: D12, I12, I18, L66, H23

Countries covered: Georgia