1. Illicit Tobacco and the Tobacco Industry Roger Mapleson Smoke Free Wrexham Wrexham CBC Trading Standards

2. Illicit Tobacco and the Tobacco Industry Brief look at the relationship of Transnational Tobacco Companies (TTCs) with illicit tobacco In the last few years TTCs have been very pro-active warning of the threat posed by illicit tobacco Do we actually have something in common with Big Tobacco?

3. What is illicit tobacco? Cheap Easily available Global problem

4. What’s the harm? Lost duty - £2 billion Serious and organised crime Lost business to legitimate retailers Damage to community cohesion

5. What’s the harm? (2) Makes it easier for existing smokers to smoke more and harder to quit Makes it easier for children to start smoking (at least 2/3rds of adult smokers started age <18) Manner of supply exposes children to other potential risks to their health and safety

6. What’s the harm? (3) Undermines quit and prevention strategies Increases health inequalities Failure to protect children Increases risk of failure to meet national prevalence targets –20% by 2016 –16% by 2020

7. Where is it? Informal economy (black market) –Boot sales –Pubs and clubs –Under the counter at retail premises –Private (fag) houses –Facebook

14. What is Illicit Tobacco (1)? Genuine tobacco – smuggled (No duty paid) Cheap whites Counterfeits

15. Market Share Most recent HMRC data –9% of all cigarettes –36% of all Hand Rolling Tobacco (HRT) Smoking prevalence is highest in poorest areas Proportion of IT used in most deprived areas will be much higher

16. Scale and nature of the illicit trade pre 2000 A very large proportion of IT was smuggled genuine product Fuelled by massive over supply by TTCs to countries where there was little or no market. ‘Lost’ in the supply chain and smuggled into UK and other countries.

17. Scale and nature of the illicit trade pre 2000 (2) Overwhelming evidence of industry involvement in illicit trade worldwide Evidence that illicit trade was a core part of the business of TTCs Evidence of industry’s links to criminal organisations

18. Industry involvement was increasingly exposed Academic research Serious investigative journalism Inquiries Litigation The illicit market began to change

19. Scale and nature of illicit trade post 2000 Smuggled genuine product has been replaced by illicit whites but: –Genuine brands still smuggled –Evidence of continued industry involvement in illicit trade –Evidence that the industry has identified genuine product as counterfeit

20. Graph of shares of different types of IT over time

21. Some examples (1) In 2008 and 2010 in Canada five major tobacco companies pleaded guilty to aiding smuggling of non duty paid tobacco In 2009 the ICIJ reported PMI, JTI, ITL and BAT had produced 30 billion cigarettes in Ukraine beyond what the country could consume, fuelling a $2 billion black market across the EU. ICIJ = international consortium of investigative journalists

22. Some Examples (2) In 2012 OCCRP published a major investigative report into JTI raising concerns that JTI ignored internal evidence of complicity with large scale smuggling. OCCRP = organised crime and corruption reporting project

23. Some examples (3) Jin Ling – the most prevalent illicit white Manufactured by the Baltic Tobacco Factory in Kaliningrad and other Eastern European Countries Has no legitimate market – made to be smuggled Production: > 10 billion cigarettes a year Raw tobacco supplied by TTC

25. Tobacco Industry “Research” JTI Billion Pound Drop PMI Project Star –Overstate the market share of illicit tobacco Use HMRC upper estimates Use empty pack surveys Press releases and articles

26. Why are TTCs involved in smuggling? Cheap tobacco is good for the industry It keeps more people smoking It makes it easier to recruit new smokers (especially children) The industry makes money directly from the sale of illicit tobacco

27. Why are they now apparently so concerned? Regulation Further duty rises Display ban Standardised (plain) packaging –TTCs say that standardised (plain) packaging is a threat because it will be easier to copy (counterfeit) and it will increase the market in illicit tobacco

28. Tobacco industry manipulation of data on and press coverage of the illicit tobacco trade in the UK An academic assessment that concluded that; “Industry claims that the use of Non UK Duty Paid/Illicit cigarettes in the UK is sharply increasing are inconsistent with historical trends and recent independent data. TTCs are exaggerating the threat of illicit tobacco by commissioning surveys whose methodology and validity remain uncertain, planting misleading stories and misquoting government data. Industry data on levels of illicit should be treated with extreme caution” Rowell A, Evans Reeves K, Gilmore AB. Tob Control Published Online First: 10 th March 2014 doi: 10,1136/tobaccocontrol-2013-051397

29. Conclusions TTCs have learnt from previous experience to use the illicit tobacco issue to their own advantage using mis-information, flawed arguments and their vast spending power to lobby against further regulation… …especially Standardised Packaging. We must not shy away from the issues raised by cheap tobacco for fear of being allied with the industry.

30. Contact Roger Mapleson Roger.Mapleson@Wrexham.gov.uk 01978 315761