💸 Thought the cigarette business was a gold mine?
In Indonesia — a country with 500 billion cigarettes per year — it seems you can strike it rich. But the reality is tougher: up to 70% of each pack goes to the government treasury, not your pocket. Why even with millions of cigarettes sold a brand can be left with mere pennies — we analyze the numbers.
📊 How much does it really cost to produce a cigarette under your own brand?
💼 Who benefits more: the factory, the government, or you?
📦 Kretek or Marlboro: what sells and what makes money?
👉 Read the analysis and order your own cost model — before investing.
Easy money on tobacco? How up to 70% of profits on the world’s most smoking market go… not to you
Contract cigarette manufacturing in Indonesia: how the brand makes money
Indonesia is the largest cigarette market in Southeast Asia, with about 35% of the adult population smoking. Moreover, over 90% of the market consists of traditional clove cigarettes (kretek), while "white" cigarettes in the style of Marlboro occupy only a niche share. This defines a key choice for a brand planning production: which product to launch, at what price, and with what positioning.
But the main feature of the Indonesian tobacco market is not taste preferences. It’s taxes. Up to 70% of the cost of a pack is made up of excise and local taxes, as well as VAT. For example, from a pack of white cigarettes priced at Rp32,000, more than Rp18,000 goes to the government. Production costs, including contract factory services, packaging, and raw materials, usually do not exceed Rp4–5 thousand per pack. The remainder covers distribution, marketing, and the brand owner's profit.
Contract manufacturing in Indonesia (maklon) allows a quick market entry without investing in your own factory. The main tobacco regions are East and Central Java, where skilled producers are concentrated. Also, excise taxes can be exempted for exports, making Indonesian cigarettes competitive beyond the country.
What’s important: to wisely choose the segment (kretek or white), quality level, target price, and sales scheme. Also, to accurately calculate the tax burden and ensure the manufacturer has licenses and quotas for excise stamps.
We conducted a detailed financial analysis of cigarette production costs in Indonesia — including calculations of excise, HJE, VAT, raw material costs, and contract services. If you are considering tobacco product manufacturing in Southeast Asia — contact us. We will provide a full cost model and help choose the optimal strategy.
Request an analysis — and calculate precisely.
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Market potential assessment plan.
This plan will help determine whether to launch a product in the Indonesian market, what risks and opportunities exist, and which strategies are best to use.
This plan will help determine whether to launch a product in the Indonesian market, what risks and opportunities exist, and which strategies are best to use.
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