On illegal tobacco undermining legitimate sales

Sheila Duffy once more attempts to make a case that tobacco retailer groups are only arguing against tobacco control because they are supported by tobacco companies. And fails.

After a long and loud campaign telling their members that counterfeit tobacco is damaging local shops, the TRA asked shopkeepers whether they thought their shop was at risk of closing due to counterfeit and smuggled tobacco. 

We are not told how those involved made sure of an unbiased sample or whether they just relied on their existing friends and contacts.

Of those who responded, 92 were from Scotland.

So the dramatic “one in ten” headline is based on nine individuals across Scotland giving their personal opinion.

That kind of survey sounds like the way thirdhand smoke was invented: the difference being that the fairy story about high taxes making opportunities for black market traders is written by the Tobacco Retailers Alliance, and the other story is created by somebody wanting to create a bad press around tobacco, and using the 'scientific' press to achieve it.

It is true of course that people giving opinions does not make fact. The argument that illicit tobacco results from high taxes has the benefit of being plausible. The hypothesis that higher taxes on tobacco creates opportunities for illegal traders cannot be argued by suggesting that it is generated solely by tobacco companies and their associates. Black market opportunities arise when there is a large gap between the production cost and the official price, and that gap is deliberately enlarged in the case of tobacco, since high taxes are meant to be a deterrent, especially to the young. The larger the gap between production and retail costs, the more illegal traders will be able to live comfortably off the margin. Tobacco control advocates must show evidence to refute this logic – it is not enough simply to deny it simply on the grounds that tobacco companies claim it to be true.

Nor is it convincing to say that HMRC deny any increase in smuggling. How can HMRC comfortably give estimates about how much illegal trading goes on, when it is by definition part of the mission of the illegal trader to slip under the radar? And how can HMRC confidently state that less smoking goes on? (or that people are not abandoning tobacco in favour of more dangerous substances)? Nothing appears straightforward in the world of illicit tobacco detection.

In the world of Smoke Free North East, the story that tobacco smuggling is under control no doubt has a robust following. The number of smokers is declining too (isn't it?). An independent survey that Smoke Free North East commissioned gives heartening news about the decline in illicit tobacco that you can read here. Deborah Arnott of ASH throws in her wisdom:

This survey is important new evidence that Britain is getting to grips with the illicit tobacco trade. Thanks to hard work by customs, trading standards, police, health and tobacco control groups around the country the level of tobacco smuggling is continuing to fall. Every independent survey shows this.

Can this be interpreted to mean that any survey not showing the UK getting to grips with the illicit tobacco trade is by definition not funded appropriately and is not to be trusted? Surveys (which produces a limited range of answers on a basis of self-selection) do feature reliable results sometimes, then, in the eyes of tobacco control?

Rather hopeless endgame vision contrasted with the view from the ground

Yet again the New Zealand government has declared that commercial sales of tobacco in New Zealand will cease by 2025. The most recent edition of Tobacco Control actually contains a section called The Endgame, which includes this beauty: How smoking became history: looking back to 2012. Here's a taste:

Of course, designing viable and effective policies is a matter partly of logic but mostly of trial and error. The cap reduction proved too complex administratively. Bhutan banned the sale of tobacco products in 2004 - but almost no one noticed!13 New Zealand went for a ban in 2020, which went so smoothly that many countries followed suit with much shorter lead times. Those who had been worried that a country adopting a ban would need, like New Zealand, to have ocean on all sides were reassured when the smoking rate dropped below 10% even before the ban took effect: it turns out that so long as cessation assistance, including a variety of non-combusted nicotine delivery devices, is available, along with regular tax increases and a focused media campaign leading up to the ban, there is little residual demand for smuggled cigarettes. 

Singapore went ahead with a ban on sales to anyone born in the 21st century. This was adopted in 2012 near the time the World Conference on Tobacco or Health was held there. There is obviously no peer pressure for young people to smoke, and the few remaining older smokers get the pity they deserve. A few other countries jumped on the 1999 cut-off date; later arrivals have used dates early in the first decade.

Easy, isn't it? I am actually quite taken aback that the BMJ has taken to publishing this kind of futuristic nonsense in Tobacco Control, which is meant to be a professional journal. It shows complete blind faith in its ideals and no notion that anything resembling an unintended consequence might imperil its ill-thought-out plans.

Back in the real world, grocers point out that there is already an enormous amount of non-duty paid tobacco being sold in the street.

Website author of Tichtich discusses illicit tobacco and the supply chain in more depth:

What this study confirms is the weakness of official statistics on the number of people who smoke. These are compiled from official sales figures together with a reasonably sensible guess of the number of legitimate personal imports under EU trade rules (thee and me bringing back our 16 cartons) and a rough guess based on the number of seizures of illegal cigarettes. Before this investigation they put the figure for illegals at less than 5% for the UK as a whole. Clearly their statistics are wrong, hence much of the so called "progress" made with smoking cessation is little more than wishful thinking. 

As an aside, it also rubbishes the notion that smokers are loyal to a brand. We couldn't care less about the brand, it's the price/taste of the thing that matters. Furthermore, to avoid the diseased photographs or foreign script, an increasing number of smokers never carry their cigarette packets, preferring to use a cigarette case. These packs go for recycling along with the rest of our cardboard. Market penetration is actually far greater than even these figures indicate.  

Trouble is the folk employed to run up all this information are several steps removed from what goes on in real life. They're unlikely to frequent the less desirable areas of towns, they're not part of the smoker experience and they're less likely to strike up casual conversations with us outside offices, shops, railway stations and beer gardens. Those who do all these things are not only aware of whats going on with cigarettes and tobacco of questionable origin, we also know that official statistics on youth smoking are similarly wide of the mark.

I make no apologies for finding this version more credible.

Illicit tobacco: Two stories, UK and London, Ontario

On the UK side, resources for intercepting illicit substances at the ports (a reserved issue handled by the UK Borders Agency) are not being deployed effectively: a combination of cuts and political pressure mean that borders agency staff are concentrating on illegal immigration control at the expense of illicit substances. Of course there are tobacco seizures by other enforcement agencies, i.e. trading standards officers and police: this one, for example. (But of course far more of it gets through the sieve that is the UKBA.)

In Ontario, Canada, the story is even more absurd. Tobacconists, the first people in the money chain to be hit by illegal imports of tobacco, have been ordered to remove educational posters warning their customers of the presence of illegal tobacco in the community and its harmful effects. The logic of the Middlesex–London Health Unit runs thus:

“They are promoting tobacco use. They are promoting a product. In essence the materials really say, ‘Don’t buy illegal tobacco, we here happen to have legal tobacco for sale’,” said Linda Stobo, program manager for tobacco control with MLHU.

Of course that's exactly what the posters say. How could I possibly think otherwise?

Incredibly the report adds: 'No charges have been laid at any London store because of the posters.' Charges laid! The report gives the indignant President of the Ontario Convenience Stores Association a fair hearing and notes the distress of some of the traders who have been forced to remove their posters.

I'm not a gambler, but I wouldn't bet on illicit tobacco going out of fashion any time soon.

Imperial Tobacco attacks Welsh tobacco control policy

This has been reported on at least three blogs already but top prize to The Big Yin for calling his piece Welsh Rarebit. For rare it has been over the last few years to see tobacco companies leading from the front.

Yet here it is: Imperial's reply to the Welsh tobacco control consultation. Forest dubs it winner of its Plain English Award, and not without reason: it is clearly set out and structured:

• Good  –there is a tobacco control policy aimed at reducing youth smoking
• Bad – it has been incompetently conceived and designed
• Ugly – Welsh tobacco policy relies disproportionately on ASH Wales, raising the question whether improper pressure is being applied by 'the anti-smoking lobbying industry'.

Imperial Tobacco demands transparency in tobacco control, not only regarding the interests and involvement of tobacco companies but of all bodies involved, mentioning specifically ASH Wales and the pharmaceutical industry. The document consistently commends the aim of reducing youth smoking, but maintains that the strategy is wrong. It is wrong in describing smoking as a cause of health inequalities, and rebukes the tobacco control policy for simplistically trying to force a change in behaviour rather than trying to understand the reasons for such behaviour.

It is also wrong because it attacks the legal market in tobacco:

In many communities, where smoking rates are well above the national average, a high proportion of smokers will be sourcing their tobacco from illicit sources and criminal gangs ... Attempts to limit the availability of tobacco from legitimate sources will be undermined by an increase in the supply from organised criminal gangs who will welcome the broadening of the market share.

Addressing also civil liberties, property rights and the self-defeating method of denormalisation as a means of persuading adults to give up smoking, this consultation response makes good reading.

As The Big Yin points out, Imperial Tobacco is not the first tobacco company to start openly opposing official policy. There is so much to be done, and I hope this kind of document will now surface frequently – my way of saying Up With This Sort Of Thing.

US Chamber of Commerce and others issue statement opposing plain packaging

Major business interests in Washington have issued an important statement on the implications of Australia's plain packaging policy, and expressed their opposition to this policy.

Although many people appear to feel that the tobacco industry's indignation about plain packaging demonstrates how important plain packaging is in the fight against tobacco, it would appear that the tobacco industry is not alone in its concern for intellectual property in general and the likely benefits to rogue tobacco traders. Two extracts:

However, plain packaging risks establishing a precedent of intellectual property destruction for an entire industry through government mandate that would be very damaging to the legitimate interests of trademark owners to associate their brands with their products, a fundamental protection under trademark law

and:

Moreover, we have genuine concerns that plain packaging will incentivize further the already growing incidence of counterfeit, smuggled and other illicitly traded goods being sold in Australia. There can be little question that plain packaging will make it easier for contraband or counterfeit products to enter the market. This will augment the inevitable downward pressure on prices of legally sold goods when brands are undermined and the market moves toward commoditization. The economic incentives to avoid the legal system will overwhelm any enforcement effort detailed in the legislation. As a country that has supported the Anti-Counterfeiting Trade Agreement (ACTA), Australia should be particularly concerned about these consequences.

 Simon Chapman, professor of public health at the University of Sydney, tries to explain how plain packaging will indubitably help. I find his logic hard to follow:

Profitability in the tobacco industry today rests largely on high-priced premium brands, which are able to attract higher retail prices purely on the strength of branding and pack image. If all packs will look the same, many smokers will wonder why they should shell out far more for a pack that looks the same as every other brand except for brand name and that internal tobacco industry research shows cannot be distinguished from cheaper brands in blinded smoking experiments. The illusion that premium brands are “better” will evaporate, and much profitability with it.

The result of this will surely be falling prices – not an outcome advocated by anti-tobacco activists in general. Chapman is confident that Australia is on top of illicit tobacco, but while it is true that Australia is less exposed than Canada, for example, there is still an issue with illicit tobacco and those involved tend to have an opportunistic streak that would likely be excited by a legitimate-industry-busting initiative like plain packaging.

The Chamber of Commerce and its allies in this statement have made an important case. Brand protection is a guard against cheap imitation, and health authorities that were really interested in health would not attempt to destroy it. Insofar as it represents an attack on intellectual property, the proposed plain packing measure is a dangerous precedent that threatens the benefits of brand packaging not just for tobacco but for any other line of products. Legality brings with it rights and obligations, and brand protection should not be removed from tobacco – or why did we ever bother with it in the first place?

Grocers discuss illicit tobacco in England, ASH Scotland rules in Scotland

An interesting piece from the trade paper The Grocer, explaining why tobacco is increasingly an attractive product for smugglers and rogue traders, and how this threat should be fought, with additional tips for shopkeepers acquiring tobacco from cash and carry suppliers to help them avoid trouble.

In discussing strategies against illicit trade, the writer refers to a gathering of relevant professional people:

.... A recent summit co-ordinated by the Tobacco Manufacturers Association (TMA) and think tank Progressive Vision, and attended by representatives from Trading Standards and the Police, concluded that current partnership working wasn't what it could be, and as a result "intelligence gathering was substantially insufficient". 

 A key element consists of working relationships between retailers and trading standards officers. Retailers are the people most directly and immediately damaged by the activities of rogue traders. They are also in danger as there have been instances of hijackings of retailers' vans while in transit from cash and carry. It is important to retailers that they can use their knowledge to identify rogue traders to the relevant authorities.

Did you spot the problem with all this? The Framework Convention on Tobacco Control asserts that parties' tobacco control strategies should not involve tobacco companies. In the eyes of the FCTC, this summit is unacceptable because of tobacco industry involvement, indeed leadership (in partnership with Progressive Vision). In Scotland they do things 'properly', ASH Scotland gets the credit and produces the report, and the tobacco industry is nowhere in sight.

The tobacco control community must be sensitive to charges that their antics leave the floor open to illicit traders. Not only have they taken a huge interest in illicit tobacco control, they have approached it with their usual insistence that tobacco interests should not get involved, citing the FCTC's demands. It's odd really, as retailers and manufacturers both have a natural interest in protecting legal tobacco trade. The likes of ASH Scotland have no interest in protecting the legal tobacco trade ... they can advise people not to smoke illicit tobacco as it is bad for their health, contributes to terrorists' coffers, and so on. But they will also tell the general public not to smoke legitimate stock either. So what's their game really about?

Denormalisation, of course. If tobacco manufacturers have been able to contribute to illicit tobacco control in the past (for example by helping to fund the No ID No Sale programme), this act of corporate social responsibility must be shown by their enemies in the worst possible light. Tobacco companies are trying to buy the public's good opinion. The only way to stop tobacco manufacturers from doing good things is to exclude them from the whole policy process, and effectively treat them as criminals.

While it's nice to go back to the school playground where there are 'goodies' and 'baddies', it's more than a little naive. More to the point, excluding tobacco manufacturers from the process leaves a gap in the communication line. The TMA/Progressive Vision summit concluded that low levels of intelligence about illicit tobacco is one of the principle obstacles to tackling the problem. In the Scottish scenario, it's hard to see tobacco control officials and retailers as natural allies, who will be able to communicate effectively as partners, since in many areas they have directly opposing interests.

The idea that the health lobby is in control of the issue is meant to be reassuring. But it isn't. The resulting report on the summit called by ASH Scotland (linked above) is blah: assurances that the summit participants/presenters are on top of things, and a run-down of the plans. We learn nothing really of direct interest to retailers (like how to avoid having your tobacco supply raided on the way home from the cash and carry), and there is no critical insight as to why illicit tobacco is such an issue (not for discussion by anyone without tobacco control instincts). This is not proper teamwork. The report describes how the FCTC will require tobacco manufacturers to enable tobacco products to be tracked from production to sale, so that counterfeit stock can readily be identified, but tobacco manufacturers are not involved in any policy discussion and their opinion considered at best irrelevant, at worst self-interested and destructive.

Like the rest of us, they'll just have to do what they are told.  

Retailers unite against European tobacco restrictions

Retail representatives of eleven European nations including the UK's National Federation of Retail Newsagents have met in Brussels to demonstrate joint opposition to restrictions on tobacco.

The revisions follow 'an EC "consultation"' that took place in 2010: the questions offered the possibility that EU member states should be allowed to legislate for themselves on tobacco control issues. The Commission's decision to pursue policies and restrictions throughout Europe gives its opponents a strong motivation to join forces.

Arguments will be dismissed as the work of tobacco company propaganda – just as licensees up and down the country who watched their takings plummet following the smoking ban were told that 'the recession' was to blame for their struggling trade.

"These measures will mean huge costs for retailers along with an explosion of the black market, presenting a threat to more than half a million small retail businesses in the EU," said Giovanni Risso, chairman of the European Confederation of Tobacco Retailers which hosted the Brussels meeting.

The retailers say existing legislation has already forced business closures, thanks to the rise in the smuggling of cheaper illegal cigarettes. Now they say standardised packaging would make products even easier to counterfeit - and banning the more addictive ingredients in tobacco would trigger an illicit market in stronger cigarettes.

They are persuaded that this approach to tobacco will make legitimate sales harder without reducing the demand for the product, and that illegal traders will reap the benefits. It is hard to see how further restrictions in the legal trade in tobacco can fail to benefit rogue traders.

The proposals mimic the Australian unbranded packaging model. A popular argument claims that the branding must be worth sales to tobacco companies, since the threat of its removal has provoked them into a reaction. But it's not that simple: brand identity is important in the marketplace to protect against cheap imitation, and on health grounds alone you would think that distinctive brand-packaging would win the support of the so-called 'health lobby'. Even an Australian anti-smoker has been won over on the argument that government has no right to tamper with the brands of legally traded products.

This legislation will see the potential destruction of brands that have been legally built up over many years. Quite simply, this puts the spotlight squarely where it should be. This is a debate about the freedom of the marketplace, and the boundaries of government restrictions to legal trade. The government, in my opinion, has no right whatsoever to actively seek the destruction of brands that are legally traded in the marketplace. Yes, it has every right to persuade people to choose not to smoke. And it has a duty to publicise the health risks of smoking, if for no other reason than relieving the pressure on the public purse of the exorbitant costs of treatment ... 

I wish the traders from these eleven European countries a productive association. Their case is compelling.

Liberal Vision declares ASH Scotland a waste of money

News indeed! a mainstream political party's blog expresses astonishment at the level of funding given to ASH Scotland. It says: Time to bin ASH before they trash another part of the economy.

The writer has just read Beyond Smoke-free, ASH Scotland's recently published blueprint for the future of smoking in Scotland. It is also reviewed by Katherine Graham of the Tobacco Retailers' Alliance in a report here. The Liberal Vision blog is far more damning of ASH Scotland than Katherine Graham, though both despair of their understanding of business, whether at the level of the small shop or indeed the entire Scottish economy. ASH Scotland's suggestion that the Scottish Government should offer shops a realistic incentive to stop selling tobacco illustrates this lack of understanding. The cost of making this work would run into billions, and there has probably never been a less appropriate time to make such a suggestion.

The other suggestion that attracts remark is the proposal to increase the tax on tobacco by 5 per cent a year: since there is already a thriving illicit tobacco market, as both Katherine Graham and Angela Harbutt of Liberal Vision point out, this is unlikely to result in a drop in smoking rates.

I particularly like Angela Harbutt's description of 'the ludicrously well-funded ASH Scotland (which has somehow reversed the Barnett Formula, receiving copiously more than its (also over-funded) English partner organisation'. Also, her conclusion that the Save our Pubs and Clubs campaign should rename itself Save our Pubs and Clubs and Newsagents.

Katherine Graham's piece is a tad too gentle with ASH Scotland for my liking but her conclusion, that raising people's general standard of living is the best way to drive down smoking rates (rather than attacking the symptoms of deprivation, such as smoking), is sound and pertinent in present conditions. In the face of the biggest round of spending cuts in decades, lavish spending on anti-smoking pressure groups like ASH Scotland is particularly bad economics, especially if this money is coming out of health budgets.

(If you have a Liberal MP or MSP, especially in Scotland, do send them a link to the blog post, won't you?)

Tobacco industry video on smuggled tobacco

Video from British American Tobacco on the illegal tobacco trade, pointing out that future tobacco control plans will make smuggling easier and cheaper.

The Scottish Government has outfaced criticism about port policing in Stranraer and other Western ports, declaring that security levels are based on consultations with police.

Legislation to stop tobacco displays is still on the cards since Imperial Tobacco failed to overturn the legislation in a court hearing last month.

Signs of the times: Tobacco manufacturers excluded from conference about illicit tobacco

Signs that tobacco control is out of control include the following:

• ASH Scotland hosts a 'unique illicit tobacco summit' (Perth, 21 September);
• It bars tobacco manufacturers from making any presentations, and even from attending as delegates;
• It issues a press release (and a blog post from Sheila Duffy) without even mentioning the exclusion of tobacco companies;
• No one protests, except the tobacco companies.

The irony is compounded by ASH Scotland's support for measures guaranteed to give illicit tobacco suppliers another slice of the tobacco market every time they propose raising taxes on tobacco, and with their support for the tobacco display ban legislation. It's not as if ASH Scotland supported the consumption of genuine tobacco: at the end of her blog piece Sheila declares that tobacco kills whether duty-paid or not. It is very unclear what she is doing fighting illicit tobacco, except trying to keep the tobacco companies out of tobacco policy.

I'm not suggesting that there should be no tobacco polices or tobacco control, but excluding tobacco companies from control of policy discussions about illicit tobacco will lead to badly informed outcomes. By all means health officials can be involved too. One policy interest should balance the other. The point is that the health department and its appendage ASH Scotland shouldn't dictate  the terms of involvement in national policy-making by excluding the industry whose product is at the heart of the discussion.

How disappointing that none of the other participants at the Perth Conference didn't see fit to protest at tobacco manufacturers being barred from even attending the conference: or weren't they told?

ASH Scotland, illicit tobacco and an international forum against cancer

Sheila Duffy's main extravaganza of the week was an 'illicit tobacco summit' in Perth (Scotland), which brought together a range of players, including a representative from the Scottish Grocers' Federation, Trading Standards, the Police, Gerard Hastings and Mary Cuthbert from the Tobacco Control division in the Scottish Government.

If nothing else, it is odd to see such people join forces in a bid to overcome illicit tobacco traders: some wish to protect legitimate traders in tobacco, while others seem to be doing everything in their power to denormalise the position of tobacco in the marketplace. It may be little time before there is division in the ranks.

Sheila's latest blog post (here if you would like to comment) reminds us that 'illicit tobacco is not a victimless crime'  (quoting Detective Sargent Allan Orr). Just in case we feel like getting involved. It winds up by pointing out that border controls next year are expected to weaken because of funding schemes drying up. Then, just as we are thinking of buying some tobacco from the corner shop, she chimes in by reminding us that it kills us anyway, even if legit.

No doubt enforcement authorities do face a headache, but it might be of smaller scale if such a large share of the purchase price of tobacco weren't made up of tax. I've suggested diverting ASH Scotland funding towards border controls, as Sheila does paint such a colourful picture of gun-runners throwing tobacco and hard drugs into the mix in small Scottish communities. (Yes, I know those particular controls aren't a devolved issue.)

Sheila adds a blog to her blogroll, from the American Cancer Society. I've yet to look in detail but it seems overly concerned with tobacco control, and prioritising non-communicable diseases. Wouldn't more emphasis on treating communicable diseases save more lives? Of course they can promote their activity, that's natural, but their priorities don't seem to promote maximum societal welfare.