Megapolis is a Ukrainian distribution company that has played a key role in the country’s tobacco market for many years. Its founder and owner is Igor Kesayev, who is known for his close ties to Russian oligarchs and special services.
“There is a market for cigarettes, there are different companies, but they don’t sell cigarettes directly to stores, they sell them only to one company, Megapolis. Megapolis Group was established in the 90s by Igor Kesayev, who was its main beneficiary at the time. That is, he created a company that monopolized the sale of cigarettes in Russia. Then the same was done in Ukraine. But it is interesting to note that Kesayev is also a co-owner of the Degtyarev weapons factory, which produces weapons for the Russian army. And in 2013, Kesayev sold shares in Megapolis to Philip Morris and GTI. That is, they received a stake in this company and became co-owners of this monopoly distributor in the Russian market. And then this company from Russia, Megapolis, appears in Ukraine during Yanukovych’s time and monopolizes the tobacco market here,” said investigative journalist Yevhen Plinsky.
The history of Megapolis is closely linked to the history of Russia’s takeover of the Ukrainian tobacco market. Thus, in the 2000s, Megapolis became a distributor of such well-known tobacco brands as Marlboro, L&M, and Chesterfield. This gave the company significant control over the Ukrainian market, as these brands were among the most popular at the time.
Later, Megapolis began to actively cooperate with Russian tobacco companies. In 2008, the company became the exclusive distributor of Donskoy Tobacco products in Ukraine. This was the first step towards making Megapolis a tool for promoting Russian tobacco brands on the Ukrainian market.
The activities of Megapolis and other pro-Russian companies have led to a significant increase in the share of Russian tobacco brands in the Ukrainian market. Currently, this share is about 80%. This means that Ukraine has effectively lost control of its tobacco market and is losing billions of hryvnias annually due to capital outflows to Russia.
“The story of the seizure of the Ukrainian tobacco market by the monopolist Megapolis is a key story that people need to understand in order to understand the structure and main issues of tobacco lobbying and all this chaos in Ukraine. A Russian company called Megapolis enters Ukraine, takes over the Ukrainian cigarette distribution market, and all Ukrainian cigarette manufacturers start working exclusively through Megapolis. That is, it is a monopoly,” Plinsky added.
There is a direct relationship between tobacco corporations and the war in Ukraine, as they play an important role by paying taxes to the budget of the aggressor country, and the tobacco monopoly only contributes to this.
For example, the tobacco giant Philip Morris International not only did not lose money from the war, but began to earn even more. According to the financial statements of Philip Morris’ Russian subsidiary, Philip Morris International’s investments in Russia exceeded $2 billion. In the first year of Russia’s full-scale invasion of Ukraine alone, the company’s revenue grew by 8% to 140.3 billion rubles.