Anti-Illicit Trade Survey 2021

London, Monday, April 4, 2022

In November and December 2021, the Tobacco Manufacturers’ Association commissioned a nationwide poll of over 12,000 smokers on their attitudes, awareness and understanding of illicit tobacco.

This is the eighth year that this survey has been carried out and trends are presented where possible.

This year’s survey points to 5 key findings

  • 71% of those surveyed bought tobacco in the last year that was not subject to UK tax.
  • 1 in 5 smokers claim to only buy ‘branded’ tobacco (i.e. not plain packaged cigarettes or Roll Your Own tobacco) even though it has been illegal in the UK since 2016.
  • Social media is seeing a surge in illicit tobacco sales with 19% of respondents buying from social media and/or websites advertising cheap tobacco, this compares to 4% before the pandemic.
  • Illicit tobacco is a front for other illegal activities 37% of respondents were aware that illicit tobacco is used as a front for other illegal activity such as people trafficking or modern slavery compared to 25% in 2020.
  • More people are reporting illicit tobacco 32% of those surveyed reported illicit tobacco when they were aware of it – compared to 12% in 2017.

The illicit tobacco market in the UK remains stubbornly resilient with more than 7 in 10 smokers (71%) surveyed claiming to have bought tobacco that was non legal (i.e. had not had UK tax paid on it) last year –a reduction from a high point of 78% in 2019.

There were reductions across the UK, expect for London where the number of smokers purchasing illicit tobacco is unchanged at 85% from 2019.

One of the most significant challenges in tackling the illicit tobacco trade remains an entrenched perception among many consumers that it is ‘acceptable’ to trade or buy illicit tobacco. 68% of those asked in this survey, had no issue with buying tobacco that had not had UK tax paid on it from a friend, relative, shops etc.

If it is viewed as crime, it is viewed as a ‘victimless’ crime although more smokers are aware that illicit tobacco is a source of funding for organised criminals, bringing financial pain and harm to local communities across the country.

According to the most recent HMRC Tax Gap data, illegal smuggling and consumption of illicit tobacco cost the Government £2.3 billion in lost revenue 2019-20[1]. In total, the Government has lost close to £49 billion[2] in revenue since 2000, that equates to £2.45 billion[3] in lost tax every year, which could be spent on vital public services.

The trade in illicit tobacco continues to have an extraordinarily negative impact on retailers, with tobacco & e-cigarette products representing the largest annual sales category for both independent retailers (34%) and the overall convenience market (21%) according to the Association of Convenience Stores[4].

Covid ‘lockdowns’ have had an impact on illicit tobacco sales, with the survey findings pointing to a major spike in people buying illicit tobacco through social media and websites advertising cheap tobacco, as well as from friends and family. The pandemic has shown however, through restrictions on travel and border closures, that stronger enforcement measures at the border and across the country can deliver significant financial benefits.

In the last two calendar years, the Government has received additional tax revenue from tobacco products of £3.4 billion (£2.8 billion excise + £0.6 billion VAT), as adult smokers have returned to the UK to purchase their duty paid products. It is important to note that this is not an increase in the smoking rates, it is a shift in where adult smokers are purchasing their products. 

Rupert Lewis, Director of the TMA said: There is positive news in this year’s survey findings, with more people reporting illicit tobacco when they were aware of it (it is a major uplift to 32% compared to 17% in 2017) and a decline in people purchasing illegal tobacco in every region across the UK (with the exception of London).

However, the 2021 findings still highlight the continued widespread availability of illicit tobacco, as well as the entrenched perception among many consumers that it is ‘acceptable’ to trade or buy illicit tobacco.

It is astounding that six years after ‘branded’ tobacco was prohibited from sale in the UK (i.e. non plain packaged) that 1 in 5 smokers surveyed, still only purchase ‘branded’ cigarettes or Roll Your Own tobacco.

Moreover, the surge in illicit tobacco sales through social media channels has become a major area of concern, with 19% of respondents claiming to have used platforms to purchase and trade illicit tobacco, compared to only 4% before the pandemic.

To address the challenge of illicit tobacco, I believe that ‘we’, meaning Government, law enforcement, industry and retail, must double down on our efforts and take the fight to those who bring about such misery through trading and supplying illicit tobacco, and this is why the TMA supports the Government in bringing forward new measures[5] to increase sanctions on those who sell or distribute illicit tobacco.

1 HMRC Measuring tax gaps 2021 edition – tax gap estimates for 2019 to 2020

2 Calculation from HMRC Measuring the tax gaps (2001-2021)

3 Ibid.

4 Association of Convenience Stores, Local Shop Report 2021

5 HMRC consultation (‘Sanctions to tackle tobacco duty evasion’) July 2021

 

Notes to editors:

  • The TMA is the trade association for the UK tobacco industry and represents American Tobacco UK Ltd., Imperial Tobacco Ltd., and Gallaher Ltd. (a member of the Japan Tobacco Group of companies).
  • The online survey was conducted by Mitchla Marketing Ltd in England, Wales, Scotland and Northern Ireland during November and December 2021.
  • For further information, please contact the TMA on info@the-tma.org.uk or 07885706422

 

To access the TMA Anti-Illicit Trade Survey 2021 one page summary, click here

To access the TMA Anti-Illicit Trade Survey 2021, click here