The share of smuggling growing in the Georgian tobacco market

access_time2017-10-13 11:51:05

 According to Deputy Prime Minister of Georgia Dmitry Kumsishvili, over the past year, cigarette consumption in the country has decreased by 25%.

Representatives of the tobacco business have  another opinion in this regard - they confirm a 25% decrease in sales, but believe it happened not because of  reducing consumption, but due to  very different factors - consumers switched to cheaper cigarettes that cut  the revenues became and after the increase in excises, the share of contraband cigarettes in the market has  increased.

the analyst at  the Association of Young Financiers Paata Bairakhtari says  the  country has  no precise statistics of smokers and imports are the only indicator of the extent of smoking.

 It is impossible to judge whether people smoke more or less given  higher cigarette prices, he explains.

According to the statistics service, in 2016 the import of cigarettes to Georgia decreased by 1, 6% and totaled $107, 3 million instead of $ 109, 1 million in comparison with 2015. As for 2017, in January-August, imports amounted to $ 53, 9 million.

 If cigarette consumption decreased by 25%, this should have been reflected first of all on importers.

As Iva Khasia, a representative of the GTI company, told Commersant, the Ministry of Finance did not provide the importers with more detailed data, but it is possible that the amounts that smokers spent on cigarettes have reduced not because of  the reduction of consumption, but because of  transition to cheaper brands. 

A  representative of the company Philip Morris Nona Mamulashvili alos speaks about a decline in sales.

In her words,  together with the change in the structure of consumption, the growth of smuggling has a significant impact on statistics.

Smuggling cigarettes cost consumers much cheaper, for this reason  the demand for illegal products has grown. Therefore, the reduction in sales of legal importers cannot be a sign that people are  less smoking in the country, she says.

 Iva Khasia notes  that frequent cases of detention of large quantities of illegal   cigarettes at customs also confirm the increased contraband.

 The share of contraband is growing in the market that is very bad for competition. We officially import cigarettes, pay all taxes and fees, and smugglers sell cigarettes without paying anything to the budget, he stresses.

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