Edition 4
(183)
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Friday, August 22, 2014
FAG ENDS Smokers search for cheaper puffs By ALEX TRELINSKI Spanish tobacco sales have collapsed in the wake of the recession, higher prices, and more sophisticated smuggling operations. The number of Spanish originated packets and pouches has been slashed by nearly half in just five years, according to official Madrid government and cig arette industry figures. While over 90 billion ciga rettes were legally sold in Spain just five years ago, the sales in 2013 had folded to 47.5 billion, which is a whopping 47 per cent fall.
The massive downward trend is down to tougher antismoking legislation (including the stopping of smoking in bars and restau rants), tax hikes and cus tomers showing resistance to price hikes, as Spain has fought a recession and record unemployment fig ures. All this in turn has led to a spike in tobacco smug gling and a search for cheaper alternatives, such as rollyourown cigarettes and pipe tobacco. Smokers are turning to lowcost cigarettes, whose manufacturers have been
doing well and already con trol a share of over 11 per cent of the market. Brands such as Elixyr, Golden America and Winfield cost around four euros a pack, around a euro cheaper com pared to regular brands, and they’ve seen a sharp rise in sales despite the low profit margin for the manu facturers. Smuggled cigarettes are another threat to the indus try with manufacturers launching a campaign about the way the Spanish econo my is being hit by being deprived of taxes. According to a commissioned for the major cigarette manufactur
ers, 8.8 percent of all tobac co consumed in Spain is smuggled in. If you also take into account the packs that a person can legally bring in from the taxfree principality of Andorra, or from Gibraltar on each visit, the proportion of taxfree cigarettes smoked in Spain is now over 11.3 percent, compared with 2.5 percent in 2009. This represents 718 million euros in lost taxes, according to the study. Around 60 percent of all tobacco seized by the Spanish authorities takes place at the border crossing between Gibraltar and Spain – more than 10 mil lion packets in 2013 – although the majority of it is in small quantities. In December 2012, Spanish police confiscated just under half a million packets of cigarettes that had been smuggled into Algeciras port in containers. Tobacco smuggling in Gibraltar between 2010 and 2013 deprived finance ministries across the European Union of an estimated 700 million euros in tax revenue, according to a recent report from the EU’s antifraud office, OLAF.
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