Studies reveal an increase in contraband cigarette brands

Studies reveal an increase in contraband cigarette brands

A study has revealed that the share of contraband cigarette brands is likely to reach 56% by June 2024, compared to 48% in the same period last year. Ipsos Pakistan launched its research study titled “Pakistan Cigarette Market Assessment 2024” in Islamabad. The report represents a comprehensive survey of over 1,000 retail outlets in all four provinces of Pakistan, covering both urban and rural areas.

The study highlights that consumers are switching from tax-paid to tax-evaded and smuggled locally produced cigarette brands, with the overall illegal share expected to rise to 56% by June 2024, from 48% recorded in last year’s Ipsos syndicated research.

The easy availability of smuggled and untaxed cigarettes at low prices throughout the country, non-compliance with the Track & Trace system, sales of cigarettes below the minimum legal price (MLP), and price differentials have negatively impacted the regulatory compliant cigarette industry. an annual loss of Rs300 billion, the study revealed.

Furthermore, the failure to implement Track and Trace proved, with 37 new brands, bringing the total to 165 brands on the market, the lack of track and trace stamps. Around 104 brands of cigarettes are sold under the MLP, while 45 brands of contraband are sold above the MLP.

“Fifty-three percent of the cigarette brands available in the market are sold under MLP,” the study added. Highlighting the market gap, the study noted that a pack of locally produced tax-evading brands of well-known brands sells for Rs120, while a pack of well-known bootleg brands costs Rs165, both widely available across the surveyed areas. On the other hand, the most popular duty-paid brands are sold at Rs220 and Rs550 per pack, with almost 95% of the cigarette market falling between Rs65 – Rs220 per pack.

The research also found that most of the locally produced tax-evading brands are available in packs of 25 and 30 cigarettes, encouraging single cigarette sales among retailers and providing them with financial benefits through discounting. The study revealed that cigarette companies in Pakistan sell 79-81 billion sticks annually, leading to an estimated loss of Rs300 billion to the national exchequer due to tax evasion.

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