September 1, 2021.
The information was prepared by Andrejs Cvetkovs, Association of Traditional and Smokeless Tobacco Products.
The smuggled cigarette market in Latvia remains one of the largest in the European Union, reaching 18.3%, according to the Empty Packs Survey for the 2nd quarter of 2021, published in August by the Nielsen research agency. One in five cigarettes consumed in Latvia is still of illegal origin.
Since the third quarter of 2018, the illegal cigarette market has tended to decrease from 22.8% to 16.2% in the second quarter of 2019. This can be explained by tax policy and the active action of state institutions in combating smuggling and the production of illegal cigarettes. Unfortunately, the latest study shows that the illegal market is growing again – reaching 20.4% in the 4th quarter of 2020. In the 2nd quarter of 2021, the volume of the illegal cigarette market in Latvia slightly decreased to 18.3%, of which 79.3% are cigarettes originating in Belarus. The volumes of illegal production of counterfeit cigarettes in the country have also increased, reaching 1.8% of the total volume of cigarettes consumed in Latvia. In total, at least 38 mln. EUR.
The largest volumes of smuggled cigarettes were produced by the Belarusian company Grodno Tobacco (73.5%), cigarette brands NZ and Premier. The market leader in counterfeit cigarettes is Winston with 89.3% of total counterfeit cigarettes.
The study analyzed 25 Latvian cities and concluded that the largest share of illegal cigarettes is in Ogre (48%), Daugavpils (38.7%), Valmiera (36%), Talsi (35.3%), Cēsis (27%) and Jēkabpils ( 27%). The share of illegal cigarettes detected in Riga is lower than the national average and amounts to 16.8%, while the lowest volume of illegal cigarettes was detected in Ventspils (4%), Saldus (3%), Kuldiga (2%) and Aluksne (1%).
The declared state of emergency on the Belarusian border and additional state border protection measures aimed at restricting the entry of illegal immigrants do not ensure the cessation of cigarette smuggling, as the smugglers operate in an organized manner, mainly by rail and road. A similar situation is observed in Lithuania on the border with Belarus.
The Association of Traditional and Smokeless Tobacco Products calls for increased attention and additional resources for anti-smuggling measures and considers that border controls at Belarusian border checkpoints and additional resources are needed to combat cigarette smuggling and increase public revenues. combating domestic cigarette production.
It is also important to ensure a stable and transparent excise duty policy on tobacco products, so as not to significantly increase excise duty rates, which would further increase the profits of cigarette smugglers and reduce revenues to the state budget. When preparing the state budget for next year, it would be necessary to adhere to the approved excise tax increase plan for the coming years in order not to create additional risks for the development of cigarette smuggling.
The association cooperates with the market research agency “Nielsen”, conducting regular market research on the circulation of tobacco products in the Baltic States.
Additional information:
tel. +371 26589090
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