Because of Syrian War, Lebanon's Tobacco Industry is Booming

Syria's conflict has caused hundreds of thousands of refugees to flee to Lebanon, putting a huge strain on the Lebanese economy and its already-crumbling infrastructure.

But the five-year Syrian civil war has been a boon for at least one economic sector: the tobacco industry.

At Lebanon's main tobacco factory, located southeast of the capital, Beirut, employees work round-the-clock but can barely cover the high demand for locally-made cigarettes.

"We are lucky that there are Syrians in Lebanon," said George Hobeika, a senior official with the state-owned factory, adding that consumption of some local brands in Lebanon has more than tripled in five years.

Lebanon is hosting over a million registered Syrian refugees. Unofficially, the number of Syrians who have fled to Lebanon is estimated to be closer to two million. Many of them are unable to find work, and spend much of their day smoking in tented encampments or makeshift accommodation around the country.

In the months following the outbreak of war in March 2011, many of Syria's cigarette factories closed down. Others were not able to cover market demand after imports of tobacco stopped, leading to a sharp rise in demand for Lebanese cigarettes — particularly Cedars, a brand that is similar to Syria's widely-smoked Hamra cigarettes. Lebanon's state-owned cigarette company sales peaked at $1 billion in 2012.

Later that year, Syrians began importing cheaper brands of cigarettes through their ports, leading to a drop in imports from Lebanon. But demand in Lebanon is still high, due to the Syrian refugees and the introduction of two new premium labels, Cedars Silver and Cedars Plus, which have taken market share away from expensive imported brands.

Lebanon's government-owned Regie Libanaise des Tabacs et Tombac, better known as Regie, is the only firm authorized to produce and import cigarettes and tobacco and is a rare success story among the country's often dysfunctional state companies. It is one of the few institutions to bring money into the state's coffers.

At the Regie factory in Beirut's Hadath district, all the machines are functioning at nearly maximum capacity and Italian engineers are installing a new machine that is expected to boost production by 12,000 cigarettes a minute within weeks.

"There is high demand to export Cedars to neighboring countries, but regrettably demand in Lebanon is higher than production," said Hobeika, a member of Regie's board of directors, sitting in his office overlooking Beirut's international airport.

Karim Dawali, 36, runs a small shop where he sells coffee and cigarettes downtown, and says he sells on average about 20 packs of Cedars Silver per day compared to 17 packets of Marlboros, which are almost double the price.

"It's clean and tastes good," said Dawali, as a plainclothes policeman bought two packs of Cedars Silver.