Cigarette Smuggling In Romania At 24.4% Of Overall Market In Sept – Survey

Smuggled cigarettes accounted for 24.4% of the total Romanian cigarette market in September, compared with 21.3% in July, but it remains below the 36.2% level in January, according to a survey by Novel Research.

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Cigarette producers say the increase in sales of contraband cigarettes is due to the Romanian Government's austerity measures.

"The significant decrease in illicit trade with cigarettes in only six months, to 21.3% in July 2010, from 36.2% in January 2010, has proved authorities' capacity to deal with this phenomenon", Adrian Popa, Head of Corporate & Regulatory Affairs South East Europe British American Tobacco, said in a press release.

Popa also said that, despite authorities' efforts, the survey clearly shows that the impact of the Government's austerity measures applied as of July 2010 has triggered an increase in cigarette contraband to 24.4% in September.

According to Popa, the government will lose an estimated EUR180 million in taxes and excises because of contraband cigarettes.

The average price of a pack of contraband cigarettes costs 7.8 lei (EUR1=RON4.3126), lower by RON3.1 than the price of a pack of legally sold cigarettes.

Most contraband cigarettes sold in Romania come from the Republic of Moldova (31.5%), Ukraine (24%) and Sebia (21.7%). Overall, the three countries account for 77% of the total contraband market.

Cigarette producers estimate cigarette contraband will account for almost 30% of the total market in 2010.

Players on the profile market came up with measures meant to reduce cigarette smuggling and punish smugglers. Gilda Lazar, head of Corporate Affairs & Communications with JTI, said one proposition, in the case of cigarettes and other excisable products, is the use of the quantitative criterion, both for contraband at border-crossing points and for tax evasion. She also said another proposition targets the same as for tax evasion, namely, to have the transport means used for contraband seized, even if it has not been technically changed to hide the products illegally brought into the country.

The Romanian Government has banned the sale of tobacco and alcoholic drinks in duty free shops starting April this year, but cigarette producers said they doubt the move will hinder contraband in any way.

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