Higher Taxes and New Restrictions Reshape Poland’s Tobacco Industry

Poland’s tobacco value chain enters a new phase

Poland remains one of the European Union’s principal tobacco producers, processors and exporters, but its domestic raw-material base is contracting. European Commission data place the country among the five EU members with the largest tobacco-growing area, while figures from the National Support Centre for Agriculture, or KOWR, show a sustained decline in farms and output.

In 2018, about 4,900 Polish farms cultivated tobacco on approximately 10,000 hectares. By November 2025, the number of farms had fallen by more than 33% to around 3,300. Annual raw-tobacco production declined from more than 30,000 tonnes to roughly 20,000 tonnes. Cultivation in 2025 was concentrated in the Lubelskie, Podkarpackie, Małopolskie, Podlaskie and Świętokrzyskie regions.

Exports remain strong despite lower domestic output

Tobacco products nevertheless remain among Poland’s leading agri-food exports. According to KOWR, they generated €2.9 billion in the first half of 2026, up 6.5% year on year, and represented 10% of the sector’s export value. Only meat, meat products and livestock, at €6.3 billion and 22%, and grain and processed grain products, at €3.2 billion and 11%, ranked higher. Tobacco exports exceeded the combined €2.6 billion recorded for fruit and vegetables.

KOWR attributes the decline in cultivation mainly to reduced EU support under the Common Agricultural Policy and measures promoted by the World Health Organization to curb tobacco consumption and cultivation. Drought and hail have also reduced yields, while younger farmers show less interest in the labour-intensive crop. Most large tobacco companies have scaled back direct purchases from Polish growers. Philip Morris International remains an exception, contracting with around 800 farms and buying more than 40,000 tonnes since 2012.

Excise increases collide with fiscal and health policy

Poland’s excise schedule for 2026–2027 raises the tax burden across several categories. From January 2026, the cigarette rate increased by 20% to 414 zlotys per 1,000 cigarettes. Excise rose by 30% for smoking tobacco and 20% for heated-tobacco products. E-cigarette liquids are due to face a 50% increase in 2026 and another 25% in 2027, while tax-stamp requirements are to cover additional nicotine products.

The Ministry of Finance expects the average price of a cigarette pack to reach about 23.85 zlotys in 2026 and 26–27 zlotys following the 2027 increase. The ministry says the policy is intended to reduce tobacco and nicotine consumption, particularly among young people, narrow the price gap with other EU markets and raise budget revenue. Polish cigarette prices remain among the lowest in the bloc.

Revenue has already fallen short of official expectations. Tobacco excise generated 33.5 billion zlotys in 2025, compared with a Finance Ministry target of 37 billion zlotys, leaving a 3.5 billion-zloty gap. Meanwhile, a Health Ministry proposal submitted to parliament would effectively prohibit most nicotine pouches, leaving only tobacco-flavoured products, currently a marginal part of sales. The measure could reduce prospective excise receipts by several billion zlotys over the following years.

Investment shifts toward smokeless products

A separate European Commission proposal would direct 15% of national tobacco-excise revenue to the EU budget. Brussels estimates that the mechanism could raise approximately €7.2 billion annually across the bloc; for Poland, it could reduce domestic budget revenue by about 4.5 billion zlotys per year.

The industry remains a major taxpayer and source of industrial investment. PMI paid around 17 billion zlotys into Poland’s state budget in 2024 and approximately 65 billion zlotys during 2020–2024. Its 2025 corporate income tax payment reached about 280 million zlotys. Since acquiring a stake in the Kraków tobacco plant for $227 million in 1996, the company has invested more than 30 billion zlotys in Poland. Its operations are associated with about 7,000 direct and indirect jobs.

The Kraków operation illustrates the sector’s changing direction. After becoming an export centre in 2004–2005, it developed production, business services and technology functions. PMI now says it is shifting progressively away from cigarettes toward smokeless products. For growers, manufacturers and distributors, the market is therefore being shaped simultaneously by a smaller domestic crop, higher taxation, tighter product rules and capital spending on alternatives to combustible cigarettes.