Research indicates an increase in illicit cigarette brands
According to a study, the percentage of brands of illegal cigarettes is predicted to increase from 48% to 56% by June 2024. In Islamabad, Ipsos Pakistan unveiled its research paper, “Pakistan Cigarette Market Assessment 2024.” The analysis included a thorough examination of more than 1,000 retail locations in Pakistan’s four provinces, encompassing both urban and rural areas.
The study showed that customers are switching from duty-paid to locally made, tax-evading, and smuggled cigarette brands. It also predicted that the overall illicit proportion will increase from 48% in last year’s Ipsos syndicated research to 56% by June 2024.
The study found that the easily accessible, inexpensive, tax-free and illegal cigarettes across the country, along with the non-observance of the Track & Trace system, sales of cigarettes below the minimum legal price (MLP), and price discrepancies, have adversely affected the compliant cigarette industry, resulting in an annual loss of Rs300 billion.
In addition, it is clear that Track and Trace was not implemented as 37 new brands—bringing the total number of brands on the market to 165—do not have track and trace stamps. Forty-five illicit brands are sold above the MLP, while approximately 104 legitimate brands are distributed below it.
The report also stated that 53% of the cigarette brands on the market are sold for less than the MLP. The study brought to light market inequalities by noting that a pack of a well-known brand that was manufactured locally and tax-evaded was selling for Rs120, while a pack of the same brand that was smuggled in was priced at Rs165. Both packs were readily available throughout the investigated locations. By comparison, the most widely used tax-paid brands ranged in price from Rs220 to Rs550 per pack, accounting for over 95% of the total cigarette market.
The majority of domestically produced tax-evading brands, according to the research, were also sold in packs of 25 or 30, which encouraged shops to sell single sticks and gave them financial advantages through discounting. According to the report, Pakistani cigarette companies sell between 79 and 81 billion sticks a year, which results in an estimated loss of Rs300 billion to the national exchequer as a result of tax evasion.
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