Your cigarette business: how to open a tobacco factory

Food industry Groceries

In this article, we will look at the controversial, unpopular and yet very profitable filter cigarette business.

Despite the efforts of state and non-governmental foundations and institutions to combat smoking, the number of smokers is not reduced.

For example, in Russia the number of smokers is around 44 million people. Even though the production of tobacco products in our country is a controlled business and subject to excise taxes, it will still be very profitable.

The current assortment of tobacco products should not confuse you: all the current major players in the tobacco market began with occupation of a meager segment and developed gradually, withstanding competition from other players. If the newly opened company produces high-quality and inexpensive products, it will also take its own place in the tobacco market.

How do tobacco factories work?

Technically, cigarette production is as follows. Dried and specially prepared leaf tobacco is fed to a tobacco-cutting machine, where it is converted into particles of the desired fraction.

Actually, a cigarette making machine consists of several units: a filter assembly machine, an installation for manufacturing an insert (collar), and an assembly that collects cigarettes from the finished parts, stuffing the tobacco into it.

In addition, for this production a number of additional devices are required: for packing cigarettes in foil, for making a pack, for packing cigarettes in packs, and packs in blocks, for cellophane packing of packs and blocks.

In addition, under Russian law, tobacco factories must obligatorily equip each pack with an excise stamp - a separate machine is also required for its labeling.

Cost-Effective Filter Cigarette Production

Such a complex and expensive production scares away many beginning businessmen - after all, the cost of the factory equipment is approximately $ 7 million, and the cost of the conveyor line is approximately $ 800 thousand.

But there is an option to start your own tobacco business much cheaper by purchasing used equipment. In this case, the risk of losing a lot of money is small: if you feel that this business is not yours, you can safely sell the equipment you purchased for almost the same amount of money you purchased.

A fully equipped second-hand cigarette production line (producing 125 packs, or 2, 500 cigarettes per minute) will cost about 12 million rubles. There are cheaper analogues - for example, equipment for the production of cigarettes without a filter will cost only 23.5-28 thousand euros (990-1180 thousand rubles). But it is better not to get involved in this kind of production - in recent years, lawmakers have raised the issue of banning these tobacco products several times.

We calculate the profitability of the equipment presented. The price of 1 kg of tobacco is from 1.8 to 2.5 euros (76-105 rubles). Considering 20 g of pure tobacco in a pack (taking into account shrinkage, sprinkling and other unavoidable losses), we get a daily need for raw materials at the level of 1200 kg, or (at the maximum price) 126 thousand rubles.

Monthly expenses (including a 24-day working month with an 8-hour working day) on tobacco are about 3 million rubles. with a productivity of 1.44 million packs - thus, the cost of only tobacco is 2.08 rubles. for 1 pack. This is the basis of cost.

Next comes the excise tax on tobacco products. At the moment it is 270 rubles. per 1000 cigarettes.

1.44 million packs contain 28.8 million cigarettes, or in terms of excise duty rubles - 7776 thousand rubles, or 5.4 rubles per pack of cigarettes.

Thus, the cost of the pack rises to 7.48 rubles.

But this, of course, is not all - there are still costs for cigarette paper, filters, a pack, foil, workers' wages, utility bills, etc.

In order not to delve into complex calculations, we take the sum of the costs of packaging products equal to, for example, double the amount of previous costs - about 14.96 rubles.

For the purity of the calculations, the amount received is 22.44 rubles. round up to 25 rubles.

Your cigarette business: counting profits

The price of cigarettes using tobacco of the 1st grade reaches more than 100 rubles. per pack, but to enhance realism, we will compare cigarettes produced by our factory with such analogues as, for example, Marlboro or Parliament, at a cost of 50-60 rubles. per pack.

Take the arithmetic average price - 55 rubles. We also introduce the concept of a wholesale price, 25% below the maximum allowable (according to the law, all cigarettes are marked with a number - the maximum allowable price). In our case, the wholesale price will be 41.25 rubles, and the net profit per pack - 16.25 rubles.

Based on these figures, we get a net profit of 23.4 million rubles. Of course, this figure is slightly larger than the real one - net of taxes and other obligatory payments, it will be approximately 75% of the indicated - i.e. about 17.5 million. Of course, part of the amount will be spent on the purchase of raw materials for the next month and other similar expenses, so that less than half of this amount will remain in the hands of the entrepreneur. Nevertheless, the return on production, ceteris paribus, does not exceed six months.

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