As the country prepares to host the tobacco industry in Dortmund, the sector is alarmed by a potential 50% price hike starting this coming January 1st.

A 50% increase in the retail price of most cigars. That’s the fear among manufacturers, distributors and retailers in Germany, as the country prepares to host the tobacco world from September 15 to 17 in Dortmund (North Rhine-Westphalia).

Chancellor Friedrich Merz’s government pushed through a bill in the Council of Ministers on July 6 to overhaul the tobacco tax on all products — cigarettes, roll-your-own tobacco, cigars and cigarillos included. In its initial version, the text calls for a moderate increase spread over four years: the proportional tax on cigars and cigarillos would rise from 1.47% to 3.83% of the retail price by 2030.

But it’s a very different scenario that is now worrying the industry. According to a Finance Ministry working document intended for an amendment put forward by the ruling coalition (CDU/CSU and SPD) to help fund healthcare insurance reform, that rate could jump straight to 21.05% as early as 2027 — a level now aligned with that of cigarettes, unprecedented according to the Bundesverband der Zigarrenindustrie (BdZ), the industry’s trade association.

“This excessive and disproportionate measure would spell the end of the German cigar industry as we know it,” warns Bodo Mehrlein, BdZ’s managing director, who points to a direct threat to the sector’s 1,600 jobs and to specialty retail. Opposition is shared even on the union side: when questioned by L’Amateur, the NGG federation (the food, beverage and hospitality workers’ union) also denounces the measure, fearing its impact on employment — while calling instead for higher taxation on large fortunes rather than on cigar consumption.

Contacted for comment, manufacturer Villiger agreed to quantify the concrete impact on its products. A Casa de Nicaragua Churchill, currently sold at €4.40 per stick (bundled), could reach €6.80; a higher-end cigar like the La Libertad Gran Toro, currently priced at €11, would climb to €17.30. That amounts to increases of 55 to 57%.

Fiscal shock

“The tax increase alone mechanically accounts for roughly 30 to 40% of the price,” explains Milenko Dramac, Villiger’s head of sales for the German market. “But if we only passed on that portion, nothing more, we’d be forced to drastically cut into our retailers’ margins.” To preserve the economic balance of specialty shops, the manufacturer therefore plans to pass on a larger increase — hence the gap between the raw fiscal shock and the final impact on price tags.

Nothing is settled yet, however. The bill has not yet been reviewed by the Bundestag’s Finance Committee, and no parliamentary timetable has been set to date, the committee’s secretariat confirms. Voices are even being raised within the governing majority itself calling for the measure on cigars to be softened, arguing they are not substitutable with cigarettes and carry little fiscal weight. Contacted, the coalition parties did not respond to our requests.

The law must nonetheless be finalized before mid-November to take effect on January 1, 2027 — leaving the industry barely two months to try to shift the text. The topic is expected to be at the heart of discussions in the halls of the Dortmund trade show.