“Today , Government has given a huge boost to the black market. We find this decision hard to believe given that Minister Noonan himself has noted that significant excise increases drives consumers into the black market. This move will do nothing to boost government revenues but will hurt legitimate businesses and retailers across the country”.

Ireland also has the second highest average price for a pack of 20 cigarettes in the EU at €9.40 with the UK slightly ahead on €9.94, however the UK have also managed to decrease their NDP level from 21.5% in 2012 to just 15.6% in 2013.

The correlation between high price and high NDP levels is strong with Ireland and France having some of the highest prices in the EU but also third and fourth in the highest for levels of NDP. Ireland is also one of the highest taxed for tobacco products with approximately 78% of the price of every packet of cigarettes goes to Government in excise and VAT.  Norway, who are non EU, charge €11.84 per pack and also have the highest level of NDP in Europe of 49.2%.

A spokesperson for the Irish Tobacco Manufacturers Advisory Committee said; “We are certainly market leaders in the EU when it comes to non duty paid tobacco, and also being the western EU country with the highest level at 28.3%.  Countries like Latvia and Lithuania face much tougher challenges than us, being surrounded by countries which have cheaper products available.  It makes bringing products cross border so much easier for them, yet they seem to be tackling it. 

“As an island we should be dealing with this problem a lot easier then we are.  There is no doubt the high cost of legitimate tobacco is pushing more people to the illicit trade but unless the government seriously address the problem by taking an integrated approach through the proposed informal working group on illicit trade, then the problem will only get worse. Fines must also be increased, the average fine in 2013 was €2,600, this is not acting as a deterrent to criminal gangs who are reportedly generating profits of €3 million per week. It is time that the Government actioned its commitment as outlined in the programme for government to increase penalties to the maximum of €100,000 for those caught illegal trading or smuggling tobacco.

“Legislation such as plain packaging will increase the illegal trade in Ireland.  As a country that considers itself a leader in tobacco control the Government needs to do much more to deal with the black market, a market which does not care about any form of regulation, does not abide by age restrictions and deprives retailers and the state of millions of euro’s in lost revenue,” the spokesperson went on to say.

ENDS.

For further information contact: Media Enquiries

The figures, based on the latest levels of NDP calculated for 2012 across Europe and the most up-to-date EU prices from August this year, show Ireland having a level of NDP of 28.2% along with the highest price for a packet of 20 cigarettes at €9.40.  NDP packs include both illegal cigarettes and packs that are deliberately purchased overseas by Irish smokers.

The closest price to this is the UK, who charged €9.29 in August for 20 cigarettes but also have a high NDP level of 21.5%.  Ireland has the highest level of non duty paid tobacco in Western Europe.

The figures also show Spain, which is a popular country amongst Irish tourists who bring back tobacco from holidays, has a NDP rate of just 10.3%.  The cost of a pack of 20 cigarettes is just €4.75 in Spain or close to half the Irish price and a level of NDP of almost two thirds less than Ireland.

Norway, which is outside the EU, also shows the close correlation between high price and high levels of non duty paid tobacco.  The cost of 20 cigarettes in Norway is €10.91 while the level of NDP in 2012 was 45.5%.

A spokesperson for the Irish Tobacco Manufacturers Advisory Committee said; “These figures really highlight the reasons why Ireland is so attractive to tobacco smugglers.  Along with having a high retail price for legitimate tobacco products, criminals know that they can escape with a small fine in Ireland even if they are caught here.  It is fertile ground for international criminal gangs who smuggle tobacco. 

“Over 1 in 4 cigarettes in Ireland are non Irish duty paid (NIDP), which is costing the government hundreds of millions every year from illegal cigarettes and tobacco tourists who travel abroad to purchase their cigarettes cheaper in other countries due to the high price here.  There is no doubt that Ireland is a target for international crime gangs and that the money they make from illegal tobacco is funding high level criminal activities in Ireland and abroad. 

“Not only are the government losing hundreds of millions a year but they are helping to furnish criminal gangs with €3million per week from illegal tobacco,” the spokesperson said.        

*NDP Figures – Industry Pack Collections 2012

*Price Differentials – Industry Prices August 2013

ENDS.

For further information:

Media Enquiries

In the second quarter of 2013, from 1st April to 30th June, the average fine for being prosecuted for the selling of illegal tobacco was €2,545.  This was down 10.7% from the last quarter where the average fine was €2,850.  The average fine for the illegal selling of cigarettes last year was €2,706.

Those convicted for the illegal smuggling of tobacco also faced a slightly smaller fine in the second quarter paying €2,500 as opposed to €2,563 in the first quarter of the year.

As fines are decreasing there has also been an 84% decrease in seizures of illegal tobacco this year despite the fact that the rate of non Irish duty paid (NIDP) tobacco in the country remains steady at 28%.  In 2012 Customs seized 95.6million illegal cigarettes.  So far this year there has only been 15million seized.

A spokesperson for the Irish Tobacco Manufacturers Advisory Committee said; “I think everyone realises at this stage that fines of this scale offer no deterrent to criminals who are making €3million a week from the illegal tobacco trade in this country.  A typical example of this is a recurring offender who was convicted in the first quarter of 2012 for illegal selling and given a fine of €2,500.  The same individual has now been convicted again for illegal selling and given the same fine and a suspended sentence.

“Seizures may be down this year but the Customs are doing an excellent job with the resources they have.  The change shows the importance criminals are now putting on illegal tobacco, taking more care and using smaller quantities to minimise getting caught.  This is huge business for them now and illegal tobacco is a very valuable commodity for criminals.”

“The Government in this country need to do more to tackle the illegal tobacco problem.  Proposing legislation to enable smugglers produce counterfeit packets quicker through plain packaging, handing down fines that would be paid off with a day’s worth of business for these criminals and increasing the price of legitimate product to levels where consumers are being continually pushed to the illegal market,” the spokesperson said.

ENDS.

The latest figures from MS Intelligence show that the level of non Irish duty paid (NIDP) tobacco in Ireland continues to remain high this year.  The figure of NIDP for the second quarter of 2013 in Ireland was measured at 27.9%, an increase from the fourth quarter of 2012, which measured NIDP at 26.6%.

The research, which was carried out by collecting empty packs from 22 of Ireland’s largest towns and cities, shows that the level of NIDP in Ireland is still at over one-in-four, when in 2011 it was at just 24.5%.  However excise increases on cigarettes and roll your own tobacco in Budget 2012 saw a surge in the attractiveness of the illegal tobacco market.

The highest incidence of NIDP was measured in Drogheda and Tallaght, both of which had an average of 32.8% for the second quarter of this year.  They were followed by Athlone at 32.4% and Ennis at 32.3%.  Cork was above the national average at 30.3% NIDP, while Dublin and Limerick were slightly below at 27.4% and 27.2% respectively.

A spokesperson for the Irish Tobacco Manufacturers Advisory Committee, said; “These figures confirm what we had expected.  The attractiveness of the illegal tobacco market remains extremely high and will continue to attract members of the public who can purchase illegal tobacco at half the price of legitimate product.

“Despite the Government efforts and initiatives, we have not got to grips with the problem of illegal tobacco in this country.  We have the second highest cost for a pack of legal cigarettes in the EU but consumers can easily obtain a pack of illegal cigarettes in their local area for half the price.  The figures reflect this.  We also have tobacco criminals who view Ireland as a haven.  Low fines of a couple of thousand euro, fines that many of them will easily make in a day, coupled with a high demand for low cost cigarettes.  

“The Government seems to feel that increasing legislation around legitimate tobacco products will actually help decrease the number of smokers, but what they continue to ignore is that much of the illegal product does not adhere to any new Irish legislation and undermines all measures seeking to reduce consumption.

“For example, the Health Minister’s plans to introduce plain packaging in the legitimate chain provides a huge business opportunity for criminals targeting Ireland to sell counterfeit European branded packs to unsuspecting consumers who will believe they are cheap because they are foreign.  Not to mention the flood of counterfeit cigarettes or “cheap whites” from producers in the Far East who do not have to adhere to any Irish packaging legislation,” they went on to say.

MS Intelligence Market Survey Report – Quarter 2, 2013

MS Intelligence Survey Methodology
·        Empty Discarded Pack collection

·        Conducted across 22 of Ireland’s largest cities

·        Results weighted to reflect national population

·        Total sample – 5,000 packs (101,416 sticks)

·        Date of Collection – 15th April to 30th April 2013

ENDS.

In 2012, 95.6 million illegal cigarettes were seized, but so far this year with 6 months elapsed Revenue have reported that less than 7 million cigarettes have been seized.  The latest defaulter’s list figures also show that fines for the illegal selling and smuggling of tobacco have decreased over the past 12 months.

In the first quarter of 2013, the average fine for someone convicted of selling illegal tobacco was €2,850. This was down 10.7% (€343) from the first quarter of 2012 when the average fine for those convicted of the selling of illegal tobacco was €3,193.

Similarly those who were convicted of the smuggling of illegal tobacco saw a decrease of 15.2% (€462) from the fines that were handed down in the first quarter of 2012, going from €3,022 last year to €2,560 this year.

A spokesperson for the Irish Tobacco Manufacturers Advisory Committee (ITMAC) said; “These figures are quite shocking.  Especially considering the fact that from reports we continually receive the illegal tobacco trade continues to thrive in local communities across Ireland.  It hasn’t disappeared, it hasn’t gone away.  You can still go to many street corners or local markets in Ireland and buy illegal cigarettes at half the price of legitimate product.”

“In all honesty, what is there to deter criminal gangs from bringing in illegal tobacco to Ireland and selling it freely across the country?  Nothing.  Legitimate product is expensive enough to attract consumers to the illegal market while they don’t have to fear punishment from the government through massive fines or penalties.

“An excellent job is being done by law enforcement in trying to stop these criminals but until they get the resources they need and there is a coordinated strategy involving all areas then they will continue to struggle to even dent the illegal tobacco trade in Ireland,” the spokesperson said.

ENDS.

Notes to Editors:

·        Revenue estimates the Illegal market to be 15% of overall tobacco market in 2012.

·        ITMAC estimate that figure to be 19% as Revenue do not include Roll Your Own (RYO) Tobacco in their figures, while 9% of tobacco consumed in Ireland in 2012 was bought outside of Ireland and imported back into the country – Total NIDP for 2012 – 28%

The proposed legislation will look to ban menthol and slim cigarettes along with introducing a minimum pack size of 40g for roll-your-own tobacco and an increase in the size of health warnings on packets.  Many of these introductions have been objected to by retailers and retail bodies, international business partners, chambers of commerce, industry bodies and consumers nationwide.

Commissioned by the Irish Tobacco Manufacturers Advisory Committee (ITMAC), the new research shows that the proposed legislation will have little or no impact on consumption of tobacco in the Irish market and will only push people to sourcing products on the black market.  The research also suggests that the newly introduced graphic picture warnings will have little or no impact as 99% of Irish people/smokers were already aware of the risks of smoking before the new warnings were introduced.

In relation to menthol cigarettes, 88% of respondents believed that banning menthol would not result in any decrease in consumption, with 84% saying they would purchase from alternative sources.

On the subject of roll-your-own tobacco, 69% of respondents felt that increasing the pack size to 40g would have no effect on consumption rates, with 86% saying they purchase roll-your-own tobacco from alternative sources if this proposed legislation became law.  “Introduction of a minimum size of 40g would mean the cheapest price point for consumers will be €15.  Consumers can already source non-Irish duty paid roll-your-own products in markets across Ireland for one third of the price,” an ITMAC spokesperson remarked.

The respondents were also asked their opinion on “slim” cigarettes and whether banning them would see any decrease in consumption.  87% of people believed it would have no effect, while 79% of people surveyed believed consumers would purchase from other sources if they were to become illegal.

A spokesperson for ITMAC said; “This research shows one thing, and that is the fact that people are well aware of the risks of smoking and the government’s efforts to stigmatise smokers has not worked in the past and the proposed measures from the EU will also not work because the black market will just fill the gap.  Trying to eliminate elements of the legitimate tobacco market only serves to increase the appeal of the black market to consumers, a black market that is easily accessible, online, at the market and on the street corner.”

“If a consumer is buying a product that suddenly is removed from legitimate sale but they can purchase it with ease locally then what are they going to do?  This proposed legislation plays into the hands of the criminals, the criminals which the Irish government continues to give good reason to do business here.  No initiative by the government has helped the illegal cigarette problem in Ireland to date.  If the government took real steps to reduce the third of the Irish cigarette market which is not even bought in a legitimate Irish shop rather than ban legal packs of menthol and outlaw brands such as Major, Irish smoking rates would drop”.

ENDS.

Notes to Editors:

EU Tobacco Directive Research
Conducted by Behaviour and Attitudes on behalf of ITMAC

Q1. Are you aware of the health risks associated with smoking as communicated by existing health warnings on cigarette packs? (Research conducted prior to new health warnings introduced on 1^st February 2013)

Yes – 99%

No – 1%

Q2. Do you believe banning menthol cigarettes will reduce tobacco consumption?

Yes – 12%

No – 88%

Q3. If a ban on menthol cigarettes was introduced in Irish retail outlets, do you believe smokers would continue to purchase menthol cigarettes from alternative sources?

Yes – 84%

No – 16%

Q4. Do you believe the introduction of a minimum ‘Roll Your Own’ pack size of 40g at an approximate cost of €15, will reduce tobacco consumption?

Yes – 31%

No – 69%

Q5. If a minimum ‘Roll Your Own’ pack size of 40g at an approximate cost of €15 was introduced in Irish retail outlets, do you believe smokers would purchase less expensive ‘Roll Your Own’ products from alternative sources?

Yes – 86%

No – 14%

Q6. Do you believe a ban on all non-flip top lid products such as Major, Players Navy Cut and Benson & Hedges Silverslide (eg push or slide packs) will reduce tobacco consumption?

Yes – 14%

No – 86%

Q7. If a ban on all non-flip top lid products such as Major, Players Navy Cut and Benson & Hedges Silverslide (eg push or slide packs) was introduced in Irish retail outlets, do you believe smokers would purchase these brands from alternative sources?

Yes – 79%

No – 21%

Q8. Do you believe a ban on all ‘Slim’ cigarettes such as Silk Cut Slims or Vogue will reduce tobacco consumption?

Yes – 13%

No – 87%

Q9. If a ban on all ‘Slim’ cigarettes such as Silk Cut Slims or Vogue was introduced in Irish retail outlets, do you believe smokers would purchase these brands from alternative sources?

Yes – 79%

No – 21%

*Research was carried out across a sample of 2,044 people between 4^th and 11^th January 2013

 View full report

The Tobacco Products Directive proposed by the European Commission will be a huge boost to the illegal tobacco market it has been revealed today.  The Department of Health issued calls for consultation on the EU legislation with the deadline for submissions today.  The Irish Tobacco Manufacturers Advisory Committee (ITMAC) has responded that the proposal is prohibition, not regulation and will therefore give a huge boost to an already thriving illegal tobacco market in Ireland.

The legitimate tobacco market contracted by 10% in 2012, however the rate of smoking in Ireland remained the same at 29%, showing that consumers have moved over to the illegal or non Irish duty paid tobacco market.  This is something that the Irish Tobacco Manufactures Advisory Committee (ITMAC) believes will increase if the EU Tobacco Products Directive proposal is applied to Ireland.

It is estimated that the EU TPD legislation will see an additional tax loss to the state of €250 million per year, on top of the €570 million that is being lost to the illegal tobacco trade, bringing the total loss to the state to €820 million per year.

The proposed legislation will also outlaw the sale of 12.5g and 25g pouches of tobacco, with 40g being the only option for purchase.  It is feared that many consumers will transfer to the black market to purchase the smaller packs at a cheaper price.  The new legislation will also see the banning of menthol and slims cigarettes along with slide packs, including traditional brands such as Major and Players Navy Cut.  This would see an overall ban of 46% of the current products on the tobacco market, again leading consumers to the black market to purchase these products.

A spokesperson for ITMAC said; “Ireland is simply not ready for this type of legislation on tobacco.  At the moment at 28%, the country has the highest level of non Irish duty paid (NIDP) cigarettes in Western Europe along with one of the highest levels of taxation.  We have a serious problem which is widespread across the country and unless the government can begin to deal properly with it then this type of legislation will only serve to increase the demand and availability of illegal tobacco in Ireland.”

“This legislation will ban 46% of all available tobacco products, meaning that consumers will be left with no option but to purchase from the black market due to the ease of sourcing and the widespread availability, not to mention the cheaper prices.  We would estimate that this legislation will see an increase in the NIDP market from 28% to over 40%, a level which would be impossible to reverse.

“The 75% health warnings on packs is also a step towards plain packaging in our opinion, something that will simply open the door wider to smugglers who are already easily accessing the country and can reproduce the most complex of packaging to be almost impossible to differentiate with the untrained eye.  This standardization of packs will only make their job easier.

“The illegal tobacco issue in Ireland is out of control at the moment.  The state is losing €570 million per year to the illegal tobacco trade and this is only set to increase as consumers will be easily able to avail of any outlawed products on the black market.  Criminals know what the consumers want and they are giving it to them at half the cost on street corners around the country, this legislation will only serve to increase the demand for what would be exclusive black market products,” the spokesperson said.

ENDS.

Notes to Editors:

Summary on EU Tobacco Products Directive (TPD) -

• Non Irish Duty Paid (NIDP) tobacco now constitutes 28% of all tobacco consumed in Ireland
• The legitimate trade of cigarettes contracted by 10% in 2012, but consumption remained constant at 29%, indicating a switch by consumers to the illegal market.
• The imposition of the 75% health warnings will likely push a significant number of consumers to NIDP due to the added advantage of price and pack equity.
• The TPD would ban 46% of all available tobacco products such as menthol cigarettes, slims and slide packs, products which are easily replicated on the black market.
• The TPD will outlaw the sale of 12.5g and 25g pouch sizes of tobacco, leaving only 40g packs available for purchase, where consumers can still purchase smaller packs illegally.
• The current tax loss to the state from the illegal tobacco market is €570 million and it is estimated that the TPD legislation will see this loss increase by €250 million to €820 million.
• It is also estimated that the rate of NIDP in Ireland will rise from the current 28% up to 40%.

*** SPOKESPERSON AVAILABLE ON REQUEST***

The Irish government will lose over €580 million in VAT and excise to the illegal cigarette market this year according to figures released by the Irish Tobacco Manufacturers Advisory Committee (ITMAC) ahead of next week’s budget.

The figures, which are compiled from the most recent CSO and EU Eurobarometer statistics, show that over 1.6 billion of the cigarettes smoked in Ireland this year will be non Irish duty paid (NIDP) meaning that the Irish economy will lose over €730 million to the illegal tobacco market by the end of the year.

The statistics also show that the rate of non Irish duty paid (NIDP) cigarettes in Ireland has gone up from 24.5% in 2011 to 28.2% this year.  This follows last year’s Budget hikes on VAT and excise, which brought the cost of a pack of cigarettes to over €9, one of the highest prices in the EU.

Of the 28.2% non Irish duty paid tobacco consumed in Ireland, approximately 18.4% of this is illegal.  This means that criminals will make over €230 million this year from illegal tobacco in Ireland, or over €640,000 per day.

A spokesperson for ITMAC said; “Last year the government increased VAT and excise again and the illegal tobacco market has soared.  The tipping point has now been reached in Ireland for the fight against illegal cigarettes.  The government is trying to achieve two things, decrease smoking rates and increase revenue from legitimate markets and the statistics show that currently they are achieving neither with the predicted tax take from tobacco down by over €80million and the consumption rate at 29% as it has been for 5 years. Any increase will make this worse and solve nothing.”

“When the government stabilised the cost of cigarettes in budgets between 2009 and 2011 the illegal market decreased slightly and stakeholders felt that finally the problem was being addressed.  Last year’s increase shows that the government is prepared to ignore the advice of the Revenue Commissioners, who stated in their Economics of Tobacco Report in February 2011 that the tipping point had been reached.  The latest figures have now shown this statement to be true.”

“Illegal cigarettes are available in every town and city across the country.  Consumers can pay €9.20 in a local shop and contribute to the Irish economy but instead they are choosing to pay €4.50 to criminals and contribute to local gangs.  There is no doubt right now that the criminals are winning hands down and the Government is losing,” the spokesperson said.

ENDS.

Notes to Editors:

• €736,460,000 – Loss to Irish Economy from illegal tobacco in 2012
• €581,963,500 – Loss to Irish Government from illegal tobacco in 2012
• €1,594,420 – Loss to Irish Government from illegal tobacco per day
• €234,929,247 – Money made by criminals from illegal tobacco in 2012 in Ireland
• €643,642 – Money made by criminals from illegal tobacco per day in Ireland
• €16,818 – Money made by criminals from illegal tobacco per hour in Ireland
• 28.2% is non Irish duty paid in 2012 – 18.4% illegal / 9.6% non Irish duty paid
• 1,601,000,000 – Amount of NIDP cigarettes consumed in Ireland in 2012

These figures come on the back of research carried out by MS Intelligence that stated the average level of non Irish duty paid cigarettes in the country for the second quarter of 2012 is 29.8%, almost one in three.  The figures, which were compiled by the Irish Tobacco Manufacturers Advisory Committee, come on the back of a seizure this morning of 7.6 million cigarettes in Dublin Port.

A spokesperson for ITMAC said; “The decrease in fines for the selling and smuggling of illegal tobacco in Ireland sends out the wrong message to criminals.  What deterrent is there to any criminal when they can make €87,000 from a van of illegal cigarettes but if they are caught they can pay a paltry fine and be out selling or smuggling the following day again?”

“This morning’s seizure announcement highlights the excellent work being done by the Customs in trying to curb the amount of illegal cigarettes coming into the country but the decrease in fines highlights exactly why Ireland is such a target for criminals.  Those prosecuted from this morning’s seizure may only receive an average fine of €1,875, whereas the value of the seizure was put at €2.9 million of a loss to the Irish economy.  This simply doesn’t add up.

“If the government is serious about stamping out smuggling and repairing the Irish economy then the penalties must be harsher for those who are stealing hundreds of millions from the Irish exchequer with lost VAT and excise.  This problem is not going away,” they said.

ENDS.

Notes to the Editors:

Revenue Commissioners – Defaulters List Figures
Average fine for selling illegal tobacco / cigarettes in 1st Quarter 2012 – €3,193
Average fine for selling illegal tobacco / cigarettes in 2nd Quarter 2012 – €2,545
Decrease of 20.2%

Average fine for smuggling illegal tobacco / cigarettes in 1st Quarter 2012 – €3,022
Average fine for smuggling illegal tobacco / cigarettes in 2nd Quarter 2012 – €1,875
Decrease of 37.9%