Illegal product reaches 57% of the cigarette market

A survey by Ibope Inteligência revealed that the illegal cigarette market continues to gain space in Brazil, driven by the lower price compared to the legal product. The consequence is an increase in consumption and a reduction in tax collection. The study also showed that illegal brands already occupy five of the top ten positions in the best-selling ranking, including leadership. Smuggling from Paraguay is the main source of the product sold illegally in the Brazilian market.

The quantitative survey, of national scope, was carried out with smokers aged 18 to 64 years living in municipalities with more than 20 thousand inhabitants, of all social classes, totaling 8.428 people, from January to April this year. According to the study, in the last year, 110,7 billion cigarettes were consumed in the country, an increase of 3% in relation to 2018. This number reflects the advance of the illegal product, which grew so much in absolute numbers (from 57,8, 63,4 billion to 54 billion units) and market share (from 57% to XNUMX%).

The illegal market consists of smuggling (49%) and cigarettes made in Brazil in a clandestine manner (8%). In the same period, consumption of legal cigarettes fell from 48,4 billion to 47,3 billion units.

 

Ibope conducts this survey annually since 2014. In the first edition, the illicit product held 40% of the market, an index that has been growing every year. Based on the trend curve verified in the historical series, the institute estimates that, if no concrete measures are taken to change this situation, illegal cigarettes will reach 62% of the market in 2020.

In addition to not undergoing health surveillance, exposing smokers to unknown risks, the smuggled product causes enormous damage to public coffers. Calculation based on the Ibope survey shows that, this year, tax evasion will reach R $ 12,2 billion, above the sector's tax collection, estimated at R $ 11,8 billion. In order to have an idea of ​​what this value represents, it would be possible to create 21 thousand Basic Health Units, 5,9 thousand Emergency Units or 8,6 thousand daycare centers.

The study also follows the evolution of the price of illegal cigarettes, which costs, on average, R $ 3,44, which represents less than half the value of legal cigarettes. The reason lies in the difference between the tax burden of cigarettes in Paraguay, 18%, and in Brazil, 71%, on average. In addition, contraband violates the minimum price required by Brazilian law, of R $ 5 per pack.

With these illicit advantages, Paraguayan brands continue to increase their participation in the national market. This is the case of Eight, the most sold in Brazil, which today dominates 16% of consumption. A year ago, it had 15%. Both this and the Gift brands (3rd in the ranking) and San Marino (6th) are manufactured by Tabacalera del Este, which belongs to the former president of Paraguay Horacio Cartes. The list of smuggled products also includes Classic (8th) and Fox (9th). Together, these five brands account for 37% of the Brazilian market. The five best positioned Brazilians hold 31%.

The current president of Paraguay, Mario Adbo Benítez, who replaced Cartes in August 2018, tried this year to raise the product tax to 40%, but was defeated in the Senate by 28 votes to 13. ETCO's executive president, Edson Vismona, regretted the decision. “Paraguay acts in a conflicting way when it comes to combating cigarette smuggling. On the one hand, the government of President Benítez indicates that it may come to ratify the Protocol for the Elimination of the Illicit Trade in Tobacco, an important instrument for combating cigarette smuggling worldwide. But, on the other hand, the parliament refuses to adopt one of the main premises of the document, the increase in taxes on the product ”, he said.

Volume of smuggled cigarettes in MA grew 17%

the-state-of-the-maranhao-online

SÃO LUÍS - Survey by the Brazilian Institute of Ethics in Competition (ETCO) - a civil society organization of public interest - pointed out that the volume of smuggled cigarettes in the state of Maranhão grew 17%. The data refers to the percentage of illegal cargoes that barely had access to the domestic market between the years 2002 and 2015.
Also according to the survey, while the number of contraband cigarettes grew, the sale of the product in the main centers of the country fell. According to the ETCO survey, of the 10 cigarette brands with the greatest market appeal in Maranhão, three are from the illegal market.
According to the institute, the main factor that contributed to the high percentage of illegal products of the genre in the state is the consumer price. According to the entity, the average price of the smuggled pack would be - on average - R $ 3,20, which is 36% of the legal minimum price for cigarettes in the legal market. Another fact that draws attention in the survey is that, throughout the Northeast Region, 26% of the people interviewed admitted that they are in the habit of buying contraband products for their own use, such as electronics, clothes and films, in addition to cigarettes. The survey also concluded that the majority of people (79%) believe that the entry of illegal products in the country favors the growth of urban violence.

Source: The State of Maranhão Online (São Luís - MA), 13/11/2016

Click here to read the full article

26% of cigarettes consumed in Acre are smuggled

the-tribune-onlineThe cigarette market in Acre is dominated by 26% of imported cigarettes, illegally. In 2012, this percentage was 9%. Because of the lower price compared to national products, due to the non-collection of taxes, illegal tobacco brands gain market with each passing year, according to Datafolha research.

Street vendor Rosa Maria says that the cigarettes most sold by her are those imported illegally from Bolivia. According to Rosa, customers complain a lot about prices, because the difference between imported and domestic products can exceed R $ 6,00.

o Rua de Benjamin Constant, close to the Urban Terminal, it is common to find illegal cigarette sellers in the morning. Cigarettes are smuggled from Bolivia and sold in Brazil illegally.

Every year, Brazil loses about R $ 115 billion with the trade in illegal goods, an amount sufficient to build 974 hospitals or 57 thousand daycare centers, or 22 thousand public schools.

“The survey shows that the main stimulus to smuggling is the difference between the price, the result of the financial advantage that criminals have due to the tax disparity between Brazil and Paraguay. In other words, greater inspection at the borders and revision of taxes on national products are necessary so that we have full legality in the internal market and more security ”, ponders Edson Vismona, president of the Brazilian Institute of Ethics in Competition.

In a note, the IRS says that smuggling feeds a chain of organized crime, causes tax evasion, harms national industry and job creation. And it still feeds the informal market, with low quality products that do not respect copyright. This creates unfair competition with local retailers and industries. In many situations, these products can even harm consumers' health.

Source: A Tribuna Online (Rio Branco - AC), 13/11/2016

To read the full story, please click here