Romania - one-third of cigarette market - smuggled cigarettes..

October 23, 2010 - BUCHAREST (Romania), October 21 – Around one in every three cigarettes Romanian smokers buy this year will be a smuggled product, according to a market survey quoted by local news agency Mediafax on Thursday, Octber 21st. Smuggled cigarettes accounted for 24.4% of the Romanian cigarette market in September, compared to 21.3% in July, a survey conducted by local company Novel research showed, Mediafax reported.

Cigarette producers say the rise in the sales of contraband cigarettes is due to the austerity measures recently adopted by the Romanian government. Among these measures was a hike in the value-added tax rate to 24% from 19% as of July 1.

Adrian Popa, head of Corporate & Regulatory Affairs, British American Tobacco: "The significant decrease in illicit trade in 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." Popa also said that the survey by Novel research clearly showed that the austerity measures had triggered an increase in cigarette smuggling between July and September. According to Popa, the government will lose an estimated 180 million euro ($252 million) in taxes and excises because of cigarette smuggling.

The average price of a pack of contraband cigarettes in Romania is 7.8 lei ($2.5/1.8 euro), 3.1 lei lower than the price legally sold cigarettes. Most contraband cigarettes sold in Romania come from Moldova - 31.5%, Ukraine - 24%, and Serbia - 21.7%. Overall, these three countries account for 77% of the total contraband cigarette market in Romania.

The Romanian government banned the sale of tobacco and alcohol in duty free shops as of April this year but cigarette producers have said they doubt the ban would hinder contraband in any way, Mediafax reported but cigarette producers have said they doubt the ban would hinder contraband in any way, Mediafax reported. (Romania slowly cancels duty free activity – only five years left for existing stores, Romania-Insider.com, 5/21/2010)

(1 euro = 4.3152 Romanian lei)
(1 USD = 3.0762 Romanian lei)

Reference: Smuggling To Feed One-third of Romania's 2010 Cigarette Market, SeeNews.com, 10/21/2010.

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