According to estimates by the biggest tobacco producer in Russia, Japan Tobacco International (JTI), the illegal trade in tobacco in the country has grown from 1-2% of the market to 9%, TASS news agency reports.
“Illicit tobacco market in Russia has grown up from 1-2% to 9% in 2018,” JTI Vice President Brendan LeMoult told the Global Illicit Trade Summit 2018 in Abu Dhabi.
According to JTI Russia’s, Sergei Golovko, the country’s tobacco market stood at 275 billion cigarettes in 2017, down 3% from 2016. However, the market volume in monetary terms grew to $18 billion last year, up 10% from 2016.
According to research agency TNS Kantar, the illegal tobacco market in Russia increased sevenfold between 2016 and the first quarter of 2018. The bulk of counterfeit products come from states members of the Eurasian Economic Union (EAEU), notably Kazakhstan and Belarus (38%).
The report says 31% of illegal tobacco products are made by domestic producers. A quarter of all counterfeit tobacco on the Russian market is being supplied from the United Arab Emirates, Serbia, Romania, Bulgaria and Tajikistan.
Golovko said that free economic zones in the United Arab Emirates have become the fastest-growing channel of illegal tobacco supplies to Russia. This year, illicit shipments from this country increased sevenfold and reached 5.7% of the overall illegal tobacco market. In the past year, nearly 200 million counterfeit cigarettes from the UAE were seized, up 150% (2.5 times) since last year.
According to Golovko’s estimates, the Russian budget lost about 50 billion rubles (about $763 million at the current exchange rate) due to counterfeit tobacco sales this year alone.