Impact of Anti-Smoking Legislation on Russian Tobacco Industry on the Example of BAT Company

This paper provides multiple regression analysis, using the least squares method, of the impact of antismoking legislation on the tobacco industry in Russia. The aim of this study is to analyse why the restrictions imposed on the smoking have not influenced the performance of tobacco companies. The main company chosen for the research is BAT (British American Tobacco) and the other two – JTI (Japan Tobacco International) and PMI (Philip Morris International), all these companies constitute almost the whole tobacco market and are homogeneous. The research uses the data got from Euromonitor International, Rosstat and Spark Interfax in order to get deep analysis of companies’ performance and get statistics associated with the consumption of tobacco in Russia. There are four hypothesis tested, including the influence of the law on revenue, EBITDA and net profit of the tobacco companies, as well as influence of law on the consumption of tobacco. Econometric analysis has shown that the government was successful in reducing the cigarettes consumption and its influence on the performance of the companies was found insignificant. Moreover, it has been studied how the legislation has influenced the marketing principles of the companies and how did they managed to find ways to overcome these restrictions.