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International Internet Magazine. Baltic States news & analytics Saturday, 23.10.2021, 04:27

Market share of illicit cigarettes down 1.6 pp in Estonia

BC, Tallinn, 23.02.2018.Print version
Altogether 13.3% of the packs of tobacco products found in Estonia have been brought into the country as illicit goods, which is 1.6 percentage points less than the year before, it appears from a survey carried out by Nielsen, cites LETA/BNS.

The market of illicit cigarettes is on a downward trend compared to the year before, but the number of tobacco packs with Latvian tax stamps has increased significantly, it appears from the fresh so-called empty pack survey carried out by pollster Nielsen. The majority of cigarettes without Estonian tax stamps are from Russia, Belarus and Latvia.

 

While the number of cigarette packs with Russian and Belarusian tax stamps has decreased compared to the year before, then the number of cigarette packs with Latvian tax stamps is on an upward trend -- the share of Latvia among the origin of cigarettes without Estonian tax stamps in the fourth quarter of 2016 was 4%, while the share was 20% in the fourth quarter of 2017.

 

Illicit goods are most frequently found in towns in northeastern Estonia. The largest amount of illicit cigarettes is consumed in Kohtla-Jarve with 32%, Narva with 27% and Sillamae with 23%. While the prevalence of illicit goods in other Estonian towns monitored is rather showing a slight decrease, the amount of illicit cigarettes in Tartu has climbed 7.5 percentage points to 14%.

 

"The drop in the share of illicit goods is positive news, in which the good work of the Tax and Customs Board has also definitely played a role. However, the good trend is shadowed by the fast increase in the share of tobacco packs with Latvian tax stamps, which is based on the significant difference in excise duty rates compared to the neighboring country. All signs indicate that border trade will likely increase even further in the next year, decreasing the tax receipts paid to the state," Taavi Salumets, chairman of the Estonian Tobacco Producers Association, said.

 

"Tobacco producers are predicting a decrease in internal purchases for next year, but this is rather based on a price difference with Latvia and the decrease in the share of purchases made by Finns, not the real change in consumption habits that was planned with the excise duty policy. In addition, the ban on the display of tobacco products will enter into force next year, which, based on the letter of explanation of the draft legislation, will not reduce consumption but will make identifying illicit goods more difficult," he said.

 

Rivo Reitmann, deputy director general of the Tax and Customs Board, said that the fight against illicit cigarettes is one of the board's priorities this year as well. "During the two months of this year we have already detected 6 million contraband cigarettes. Most of them had been in transit through Estonia to Scandinavia, but we are a country on the eastern border of the European Union and thus bear the important responsibility of protecting the economy and health of the people of the entire union," he said.

 

"As is indicated by the empty pack survey by Nielsen, illicit cigarettes also stay in Estonia. Even though the share of illicit cigarettes has dropped, we cannot yet be fully satisfied with the situation, as the excise duty damage caused by the cigarettes is still several dozen million euros," Reitmann said.

 

Illicit cigarettes are considered to be those cigarette packs that have foreign stamps, lack Estonian tax stamps and also contain forged production. Forged production makes up 0.5% of illicit cigarettes, which is 0.1 percentage points more compared to the results of the survey carried out in fall 2016. The consumer of forged cigarettes may think that they are consuming a product sold also on the legal market, but which actually does not meet the product's standards of quality and safety.


Brands not officially sold in Estonia make up 4.6% of the collected cigarette packs.

 

Nielsen carries out the survey twice a year. The latest survey was conducted in 14 towns across Estonia and 3,300 empty packs were examined. The number of cigarette packs collected was in proportion to the number of the town's residents and the entire population. The survey was carried out from Sept. 25 to Oct. 1, 2017.

 

The methodology of the survey has been coordinated with the European Anti-Fraud Office (OLAF) and the survey was financed by four largest tobacco producers: British American Tobacco, Imperial Tobacco Limited, Japan Tobacco International and Philip Morris International.






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