The share of bootleg cigarettes sold in Russia has nearly doubled to 15.6% from 8.4% last year, a study carried out by analytical agency Nielsen and sponsored by major tobacco companies has revealed, according to Vedomosti.
In this year’s version of the document, Nielsen analyzed the situation not only in Russian cities with over 50,000 inhabitants but also in small villages.
Every second bootlegged cigarette pack can be sourced to member states of the Eurasian Economic Union (EAEU), accounting for 55.4% of the black market, Nielsen said.
Belarus is considered to be the largest source of origin for illegal tobacco sold in Russia. Belarusian-made cigarettes account for 36% of the entire market of bogus cigarettes sold in the country, the study shows.
Kazakhstan comes in second (8.9%), followed by Armenia (8.8%). The second major source of illegal tobacco are such countries as Iran, Iraq, the United Arab Emirates and Serbia, with a 15.7% share of the total number of illegal cigarettes on the Russian market.
The driving forces behind the growing sales of illegal cigarettes in Russia are the public’s declining purchasing power, the proximity of EAEU states and their logistics, Nielsen notes. The major culprit here is actually the significant difference in price between legal and illegal cigarettes.
People living in Russian villages, whose buying power is far lower, are mostly subjected to the risks of purchasing bootleg cigarettes, said Ilona Mirtova, director of a corporate and legal department at Imperial Tobacco. The situation in Russian cities is not any better. In Moscow, illegal market accounts for 7.3% and in St. Petersburg for 6% (compared with 4% and 3% a year ago).
Russia’s federal budget could lose up to 100 billion rubles ($1.5 billion) from shortfalls in excise duties and value-added taxes in 2019, according to estimates by major tobacco companies. “The situation on the market has reached its historic zenith. The current measures are not enough,” said Igor Cherkassky, who heads BAT Russia’s unit for countering illegal tobacco products.
