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Plain Packaging Adds to Rise in Illicit Trade

The Scottish Grocers’ Federation have called on the Scottish Government to reflect on the findings of a new KPMG study from Australia which shows the illicit tobacco market has risen since plain packaging came into force.

KPMG’s Illicit Tobacco in Australia is the first extensive evaluation of the Australian illegal tobacco market following the introduction of plain packs in December 2012. Australia’s illicit tobacco market has now increased to 13.3% of total tobacco consumption and is now at its highest ever level, with more than $1bn a year lost in excise revenue.

This report follows a study from Roy Morgan Research which revealed an increased awareness of the illicit tobacco trade from Australian retailers, in addition to increased transaction times, customer frustration, staff costs and product handling errors faced in many smaller stores.

SGF Chief Executive, John Drummond commented:

“This robust study from KPMG is incredibly timely following the publication of recent figures from HMRC’s Tobacco Tax Gaps showing increases in the illicit trade in Scotland and the UK.

The initial evidence from Australia clearly shows that criminal elements have been the main beneficiaries of plain packaging to the detriment of the Australian Government, taxpayers and small retailers.

The figures on the increased Australian illicit trade highlighted by KPMG are alarming and should not go unnoticed. Unlike the many predictions that have been made, this provides real data that the black market has grown while tobacco consumption has failed to drop.

I would therefore urge the Scottish Government to carefully reflect on KPMG’s findings ahead of their planned consultation. It would not be wise to press ahead with a policy which will exacerbate the already prevalent illicit trade in Scotland.”