small image of a pack of illicit 'jin ling' brand cigarettes

How many corner shops face closure because of tobacco smuggling? 1

Is the illicit trade in tobacco products close to forcing ‘one in six’ stores in the UK out of business as claimed by the ‘Tobacco Retailers’ Alliance’?

image of a pack of illicit 'jin ling' cigarettes

A pack of ‘Jin Ling’ brand cigarettes, manufactured legally in Russia then exported throughout Europe for illegal sale. In the UK these sell for half, or less, of the price of legal brands.

A group calling itself the ‘Tobacco Retailers’ Alliance’ was in the news during August with some pretty dire warnings. Apparently, the ‘worsening’ illicit trade in tobacco is making ‘one in six’ retailers contemplate shutting up shop.  Last year it was only ‘one in eight’ – things seem to be getting worse.

The ‘Tobacco Retailers’ Alliance’ (TRA) is wholly funded by three major tobacco companies. They are now open about this , though they have sometimes been a little less-than-clear about it in the past, which has gotten them into trouble.

Commenting on the research Whitstable shopkeeper and TRA national spokesperson Debbie Corris says:

“These results show that tobacco smuggling is not only a threat to the livelihoods of independent retailers but one that continues to worsen… The Government needs to allow tax levels in the other member countries to catch up with those in the UK so that smugglers do not see the UK as the most profitable place to ply their illegal trade.”

In the Scotsman newspaper, Glasgow shopkeeper and Scottish spokesperson of the TRA Geoff Barrett says:

“These results show that tobacco smuggling is not only a threat to the livelihoods of independent retailers but one that continues to worsen… The Government needs to allow tax levels in the other member countries to catch up with those in the UK so that smugglers do not see the UK as the most profitable place to ply their illegal trade.”

Strikingly similar. Obviously,  it would damage the TRA’s image of an advocacy group for the retailing little guy if the whole research package was designed and managed centrally by the tobacco companies with virtually no input from the retailers, while a hired PR firm provided identical canned quotes for retailer figureheads based on predetermined, anti-tax, industry policy positions. So, I’m sure they wouldn’t have done anything like that.

Anyway, although the source of the claim obviously invites scepticism, things can be true even if the source itself is disreputable, so let’s see how the claim stands up…

…but finding out how these claims stand up can difficult. In contrast with scientific publications where full methodology is published along with the results, the TRA rarely provides such details. Because of this, people are left largely in the dark about where these ‘one in six’ or ‘one in eight’ numbers come from, or how reliable they are likely to be. To readers that don’t have a specialist interest in the issue, they might take the headline at face value – and the TRA certainly makes things seem pretty bad.

Recently however, some details of the survey came out through another source. In a ruling by the Advertising Standards Authority which found a newspaper advert by Japan Tobacco International to be misleading (not for the first time) some details of the 2012 TRA survey method were mentioned in passing:

The TRA had been conducting annual surveys of its members for the previous 15 years (except 2001 and 2008). In its 2012 survey, approximately 25,000 questionnaires were sent to independent tobacco retailers, from which 1,062 useable replies were received.

So, it looks like the ‘one in eight’ (13%) of retailers in 2012 who responded that their business was in peril as a result of the illicit trade didn’t really represent 13% of the all shopkeepers in the UK, or even all members of the TRA. Instead it was 13% of the thousand or so that responded to the postal questionnaire. The thousand that responded to the questionnaire represent around 4% of the TRA’s claimed 25,000 strong membership.

This is a fairly major issue when considering the results, as it seems very likely there is going to be strong selection bias present. People who are particularly concerned about the impact of the illicit trade on their shop are going to be the kind of people who take the time to complete a survey on the impact of the illicit trade on their shop. Making an assumption that all the people who could have taken part in the survey (they received a copy of it from the TRA) but who didn’t respond weren’t concerned enough about the illicit trade to bother with it, then only about 0.6% of retailers registered with the TRA (or around 1 in 180) think they are in danger of closure because of the black market. Obviously, this is a big difference from the results the TRA initially presented.

Of course, some people might be very concerned about the illicit trade, but could just have been too busy to bother with the survey, or missed it in some other way. This is possible, but I’d speculate that these people are probably in a minority – if you were in a position of having your livelihood severely threatened by competition from the illicit tobacco trade, you’d be highly motivated to let people know about it in the hope something would get done. The fact many didn’t is itself instructive.

(We already pointed out in a letter following the TRA’s initial release of the figures that the Scottish headlines seemed to be based on the views of only around 9 individuals. This seems even more of an issue now, in light of the problems with the survey method, and when you consider there are in the region of 10,000 tobacco retailers in Scotland as a whole.)

All of this suggests strongly that the TRA are more interested in getting headlines which match their ‘booming illicit trade’ narrative, rather than presenting an honest and fair view of shopkeepers’ opinions.

Incidentally the UK black market share for cigarettes and hand rolled tobacco has been in decline for around a decade, and recent trends look like this, for cigarettes and hand-rolled, respectively (from HMRC):

graph of illicit cigarette market 2006/7 to 2010/11 showing decline from around 15% to 10% during this periodgraph of illicit hand-rolled tobacco market share 2006/7 to 2010/11 showing decline from above 50% to below 40% during period

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One comment

  1. Pingback: Illicit tobacco is at historically low levels – keep up the good work « tobaccounpacked

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