New Cigarette Price Tiers: Revenue Growth or Downtrading Risk?
Published: 07:37 PM, 15 June 2026
New Cigarette Price Tiers: Revenue Growth or Downtrading Risk?
Raihan Ahmed, Head of Online, AA : The government has proposed higher prices across all four cigarette tiers in the national budget for fiscal year 2026-27, aiming to increase revenue collection and discourage tobacco consumption. However, industry stakeholders and market observers have expressed concerns that the uneven rate of increase may encourage consumers to switch to cheaper cigarette segments, potentially affecting both government revenue and tobacco-control objectives.
Under the proposed budget, the minimum retail price of a 10-stick pack of low-tier cigarettes has been raised from Tk 60 to Tk 62, while the price of medium-tier cigarettes will increase from Tk 80 to Tk 92. High-tier cigarette prices are set to rise from Tk 140 to Tk 160, and premium-tier products from Tk 185 to Tk 210. Consequently, the low-tier segment will experience a price increase of only 3.33 percent, compared with increases ranging between 13 and 15 percent in the medium, high and premium categories.
According to the budget speech, the revised pricing and tax measures are intended to strengthen government revenue collection while reducing tobacco consumption through higher retail prices.
Specialist, however, argue that the varying rates of increase could widen the existing price gap among cigarette categories. They warn that smokers may shift from higher-priced brands to lower-priced alternatives — a phenomenon commonly known as “downtrading” — which could reduce sales of higher-taxed products and ultimately affect the government’s revenue targets.
Market analysts note that Bangladesh’s cigarette market remains heavily concentrated in the low and medium segments. With only a modest increase in the low-tier price, some consumers may opt for cheaper products rather than reducing consumption, potentially limiting the effectiveness of public health-oriented taxation policies and constraining additional revenue growth.
In response to a query from The Asian Age on the matter, a spokesperson for BAT Bangladesh said: ''BAT Bangladesh has operated in the country for over 116 years and remains deeply committed to Bangladesh’s development as one of its leading taxpayers.
In regard to the National Budget declaration, we are concerned that such an excessive increase across Tiers 1, 2 & 3 will widen the already significant price gap existing between the tiers, encourage consumer downtrading and negatively impact government revenue. A disproportionately lower increase in Tier 4 will further aggravate the government revenue position and distort the market given the large volume concentration in that tier.
As the only legal company operating across all cigarette price tiers, BAT Bangladesh believes that any fiscal framework should ensure a level playing field for all compliant manufacturers, support foreign direct investment, protect government revenue and discourage illicit trade. Our recommendation would be for the government to address these anomalies prior to ratification of the National Budget."
Observers say the ultimate impact of the proposed measures on both revenue collection and tobacco control will depend largely on consumer purchasing behaviour and sales trends across different market segments during the coming fiscal year.
