Plain packaging ‘the nail in the coffin’ for retailers

By Jessica Quinn

RETAILERS in Ennis and Shannon are fearful for the future of their businesses and jobs, as a result of the growing trade in illegal cigarettes in the county. They say plans for the introduction of plain packaging will drive tobacco sales further underground, with more and more people turning to illicit and counterfeit products.

According to one concerned Ennis shopkeeper, “this will be the nail in the coffin”.

Cancer, asthma and heart health charities have welcomed the move to plain packaging and Revenue and the gardaí say they do not believe the plan will lead to increased smuggling. However, local retailers have a very different view, saying it will make it easier for the illegal trade to thrive.

A survey carried out last year showed that one in three cigarettes smoked in Ennis were illegal. The study of discarded packs found on the streets and bins of the county capital was carried out in July and are the latest figures available. It showed 32.3% of packs recovered for the survey did not have the Irish duty paid stamp, an 6% increase on  the previous six months.

Tobacco firm, JTI Ireland, estimate that one in four tobacco products in County Clare come from the illicit trade, with organised crime groups behind much of this. They say their figures indicate millions of euro are being lost annually.

“The legitimate tobacco retail sales value best estimate for Clare is €45 million. This is the value of the money going through the tills of Clare retailers from sales of tobacco products in the last 12 months. Given that we estimate that one in four tobacco products in Clare come from the illicit trade, you can see the value that is lost to retailers every year as a result,” said Alec Elliott, media relations advisor with JTI.

According to Rose Heaslip, of Heaslips in O’Connell Street, Ennis illegal cigarettes are “freely available” throughout the town.

“They are actually sending price lists in the doors of houses; a friend of mine got one in her door,” she said.
A reformed smoker herself, Rose and her father, Jack, say jobs will be lost if the illicit trade continues to grow. They believe the Government’s plans will lead to an increase.

Rose said, “If the plain packaging is brought in, they may as well close down the shops. It will be so much easier for smugglers to copy the packets. The sale of cigarettes is a huge part of our business, more than 50% and anybody who comes in for a pack then buys something else. We’ve had people coming into us asking do we have a pack of something and you would know that it’s come in illegally. The illegal cigarette trade is huge. I’ve asked around and I’ve been told there is no problem getting them, people don’t really like them but they get them for the price.

“If the plain packaging comes in and people can buy them on the street and not be able to distinguish them from the brands in the shop, why would they go to the shops and buy them. We’re fearful for the future of our business, it’s family-run and it’s our bread and butter.”

Miriam Tierney, from Tierneys in Ennis, has a similar view. “The plain packaging is not going to make any difference to stopping people smoking but it will make it easier for the counterfeiters to copy the packaging. It will be very hard for us as retailers to recognise one box from another. Things are quiet enough as it is, this will be the final nail in the coffin.”

She believes the Government should instead concentrate on educating young people about the dangers of smoking.

Eoin Hoctor, who has a newsagents in Shannon’s Skycourt Shopping Centre commented, “I would have quite a large volume of cigarette sales. I don’t smoke and I would prefer if my kids didn’t smoke but the legislation is driving more and more of the trade underground and into the illegal market in terms of counterfeit cigarettes.”

His shop employs between 12 and 15 staff, with cigarettes accounting for 30% of turnover.
“They don’t constitute a large profit margin but they do create footfall. We tend to find people come in for cigarettes and will buy something else. There seems to be the view that taking away the branding will reduce the volume of cigarettes being consumed by young people but, in the Australian market, where they brought in the plain packaging, the same number of people are smoking and the trade is turning to the illicit market. If that happens here, the normal channels of sale, your shops and convenience stores that are the heart of towns and local communities, will struggle, as they already are in this country. You will see more local businesses failing on the basis of not having enough customers coming through.”

He believes the penalties for the sale of illicit cigarettes are too lenient and are not enough of a deterrent. “The market is too lucrative for these people,” he said. “If the Government is serious about trying to reduce the amount of cigarettes in circulation, there needs to be more emphasis on education and stronger enforcement of the illicit trade.”

A spokesperson for Revenue told The Clare Champion, “Revenue’s view in terms of the impact of the standardised packaging legislation on the illicit cigarette market, is that we are satisfied that it will not damage our efforts to tackle the problem. We rely on our tax stamp to identify tax paid tobacco products and the standardised packaging legislation will accommodate the stamp.  We expect that the new packaging rules will ensure effective security features to make counterfeiting very difficult; the tax stamp will certainly contain all the features possible to minimise the risk of counterfeiting.

“The problem of illicit tobacco is very much a global one, driven by a number of key regions in Asia, the Middle East and Eastern Europe, where there is large-scale production of cigarettes for illicit distribution to other countries or which serve as distribution centres for illicit product.  A European Commission map circulated with this statement illustrates the main international trafficking routes. Internationally and domestically, the field is dominated by organised crime groups.”

The spokesperson added that Revenue’s response to the problem includes a number of key elements.
“We work very closely with our EU partners to tackle source countries and apply the maximum pressure on the governments concerned. We also work very closely with EU and other Member State law enforcement agencies, particularly OLAF (the European Anti-Fraud Office),  to get the best possible intelligence on illicit shipments into Ireland. We work very closely with An Garda Síochána, CAB, the PSNI and Her Majesty’s Revenue and Customs in identifying and tackling the illicit trade on an all-island basis. We examine shipping and passenger traffic on the basis of intelligence and risk profiling.

“In terms of detection technologies, we use scanning equipment and sniffer dogs in ports and airports. We conduct regular street-level exercises to tackle illicit cigarette sales and, finally, our enforcement activities are kept under continuous review by a Tobacco Executive, which is chaired at Commissioner level.”