ISLAMABAD: The illicit cigarette industry share has been increased to 39 percent in the market as compared to claims of 9-18 percent share by the so-called NGOs following a major increase in Federal Excise Duty (FED) from February 14, 2023.
The analysis conducted by the multinational companies revealed that 70 new brands of smuggled cigarettes have been introduced in the market after increase in prices of cigarettes.
A sharp increase has been witnessed in the availability of smuggled cigarettes across the country at cheap rates, forcing the price-conscious consumer to cheaper smuggled illicit cigarettes.
The analysis revealed that a 30% increase in sales of smuggled cigarettes was recorded during the month of March.
More than 100 brands have flooded the market which have no graphical health warning mandated by the Ministry of Health and do not conform to the laws of Pakistan.
Furthermore, they sell with impunity, flouting all regulations set by the Government of Pakistan without fear of being caught.
Dispelling the impression created by so-called NGOs that the illicit cigarette industry share is only 9-18 percent, industry experts briefed that the figures of such non-existent NGOs have no relevance. All these figures are neither authentic nor backed by any actual market surveys.
According to industry experts, all big and documented national and multinational companies in various sectors in Pakistan utilise the services of top of the range retail audit companies for retail audit across the country to have the authentic market statistics.
For all multinational and large national companies, market research, detailed market data and research regarding the sales trends of their brands and other companies within the market is of utmost importance. And all the big companies conduct their planning and analysis according to this data and research, industry experts added.
According to the experts, the current statistics of the cigarette industry are from the big research company Access Retail regarding the retail audit of Pakistan.
Access Retail Company is currently operating in food, beverages, telecom, tobacco, personal care product, electronic, agriculture, healthcare sectors.
And all the major multinational and national companies related to these sectors get the retail audit data from Access Retail to conduct market research regarding their own data and that of other companies in the respective sectors, based on which future planning is being done, industry experts added.
Talking about data shared by various NGOs, industry experts took a strong stance on the credibility of these figures. According to them, interestingly in last few years we have seen mushroom growth of anti-tobacco NGOs.
The claim made by these NGOs that the rate of illegal cigarette trade is very low and this rate is only 9% to 18%, has serious credibility questions.
Industry financial experts highlighted that these statistics of NGOs are based on a survey report issued by a NGO in 2019 and its survey report was based on the data from Islamabad only.
The 2019 report said that the volume of illegal cigarettes trade in the capital city of Islamabad was 18 percent. In addition, another foundation released a report in 2018 saying that illegal cigarette trade in Pakistan is negligible and the volume was reported to be only ten percent, experts added.
2018 and 2019 survey reports have serious credibility issues due to research techniques and data sampling size and areas.
It is a very unprofessional approach to understand market trends in any industry based on a few years old survey conducted in only one city or a few cities with a sample size of only a few hundred.
These NGOs have never talked about government’s action against illicit cigarette industry but always propagating less market share of illicit cigarettes in Pakistan due to unknown reasons, experts said.
Current market ground situation is really alarming for legitimate sector as well as government.
The sales volumes for March 2023 have completely flipped where legitimate industry sales stand at 1.84 billion sticks in March as opposed to 4.84 billion sticks in January 2023 (pre-mini budget).
Similarly, the illicit volume has expanded exponentially from 2.85 billion sticks in Jan 2023 to 4.8 billion sticks in March 2023.
This demonstrates a shift of 3 billion sticks from the formal sector to the illicit sector which has deprived the govt of invaluable revenue at this trying juncture, analysis added.
Copyright Business Recorder, 2023
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