cigarette pack Bootleg / parallel market tobacco
Check out the health warnings.
cigarette pack

The folk who are my neighbours - childless couples - all smoke. Opposite ends of the age range, the young ones smoke whatever they can afford. If they're flush then it's manufactured, if not it's rollups. The older couple are divorcees with their own sets of grown up kids (who never visit, but Skype). She smokes manufactured while he smokes rollups.

I chat away over the fence but I've never been able to find out what brands they smoke. The older man always keeps his tobacco pouch in a leather wallet and rolls a half dozen at a sitting, then pops them into a cigarette case which he takes with him to work, but the other three never take their cigarette packs outdoors and seem to dispose of their butts very responsibly.

We've had a few reasonably warm days in Edinburgh this summer and I've been able to check out pub smoking areas as well as pavement seating in Rose Street. It seems the people most likely to leave a cigarette pack on display are women. They take them out their handbag, keep them close to hand then put the pack back in their handbag when they leave. I don't get the impression it's a status thing because most of the time the pack's obscured by their mobile phone and/or cigarette lighter.

With men - and ladies who don't carry handbags - they seem to have a pocket where the pack or pouch sits and as soon as they've rolled one, or taken one out the pack, then everything goes back into that pocket. Certainly that's the way it is with myself, I pre-roll a bunch then keep them in a cigarette case which I keep in a pocket when I'm outdoors. No one has the slightest clue what brand of tobacco is in my rollups or tubes.

I suspect very few people are as interested as myself in what other people smoke, however it's not the brand that interests me, it's the warning labels. I do a mental high five whenever I see one that's not in English because that person's on exactly the same wavelength as myself.

Yet there are exceptions and here's an example of one that's manufactured in a legitimate facility in Northern Cyprus. The packs are 50g, cost Euro 4.50 and it's a very mild smoke. It says Most Virginia and that's what it is, close to 100% Virginia leaf and I suspect it's from plants grown in Northern Cyprus.

Most Virginia 50g tobacco pouch

Most Virginia 50g tobacco pouch.

They made a change but I shan't be in any rush to buy more.

It'll be far more interesting in May 2016 when plain packs will be compulsory in the UK (though expect to see them in the shops from early 2016). They're expected to follow the Australian model of olive colours and about 80% of the pack being covered in health graphics. In the rest of the EU - save Ireland - it's 65% of the pack that'll be covered in health graphics, but the manufacturer, their brand and logo will still be allowed (01). Then I'll be able to tell at a glance if it's a Brit fag, or an import.

As things stand it's price that drives the market. Not the official market - that's something that's in precipitous decline. The real market for heavy smokers, or those with limited income, is the parallel market. It's difficult to describe the supply side because it's so diverse. I met one individual who was trying to flog Drum tobacco to people who had bought tobacco from a 24/7 at night. The irony is I hadn't bought any; I'd looked at the under-the-counter-tobacco the shop stocked! Anyway he sided up to me to ask if I liked Drum tobacco, to which I asked what colour it was. He looked perplexed, so I explained that I enjoy Drum Yellow. He continued to look flummoxed, so I had to tell him that if the pouch was blue I had no interest, but if it was yellow then yes I'd be in for a couple of pouches at £8 for 50g. He didn't have Yellow, only Blue and wanted £12 for 50g, which was about 60% the cost of retail at the time. Sadly no sale for him.

So you've got your naive non-smoker trying to make a few quid on the side with a view to building up a list of contacts for the future. He seemed to be late middle age, white. However I'm told that students are into this as well, using low cost carriers to stock up on pre-orders that have to be 500g lots, then he'd be willing to shop around to get the brands demanded and make a decent return to cover the cost of the flight and give him (it's invariably a him) a weekend in some foreign city as his payoff.

Then there's the car boot trader who maybe flogs tee-shirts and the like with a good supply of fags and tobacco that's stored in a nearby vehicle. The deal's to sell to people they see smoking, then it can go from that to a telephone call every time they get another consignment. But the best are those who have their own processing plant - and they're springing up everywhere. One medium sized close to Southampton (02). Another hugely sophisticated in Manchester (03). A colossus in Northern Ireland (04) and a little bitty thing in Lancashire (05), all nailed by the authorities within the last year. They're only the tip of the iceberg and I note none have been discovered in Scotland, showing our lot are fast learners... thankfully.

The money invested in some operations is considerable and the output so large that they can only be selling in bulk. Bulk that's beyond the means of one individual. That means they're selling to retail outlets - and that's the mother lode. Shops buy with cash and sell it at a markup that's umpteen times what they get on legitimate tobacco. And there's no record of anything so no VAT, no income tax and no need of any form filling. These small shops have been hit hard by satellite shops of the big brands; Tesco, Sainsbury and the Co-op undercut them on virtually every product line. Also their staple of newspapers and magazines have been in decline for years and while the same is true of tobacco products, they've been shafted with that as well by being forced to hide their displays. And that's driven some of their customers to the parallel market, a fact Chris Snowdon picked up on (06). Now even sweeties and sugary drinks are under fire.

One advantage they have is they're usually owned and run by one family; they simply don't have the margins nor the turnover to pay the minimum wage to an outsider. Providing they keep things in the family and are careful with their customers, then they only need fear a competitor telling the authorities.

I have experience of the dynamics involved and no it's not restricted to people of the same nationality, it's based on relationships. There's an element of trust for the shopkeeper to even get bootleg cigarettes, then there's an element of trust between the shopkeeper and customer. They don't get offered to every smoker, just those he or she knows well. And what's flooding the market at the moment is Fest cigarettes. These are manufactured in the Grondno tobacco factory in Belarus. They're perfectly legitimate cigarettes that dominate the bootleg market in Lithuania (07) and form a goodly proportion of seizures in the UK, with this report telling of 1,370,000 Fest cigarettes found in Manchester in November 2014 (08). And 177,460 cigarettes (that included a high percentage of Fest cigarettes) as well as 50,000g of tobacco found at a raid in Hull on 31 July 2015 (09).

I found the comments revealing, with this one showing how even recent arrivals to the UK can supplement their income by buying 100g of tobacco for £9 and then shifting it to Brits not in the know for a 100% markup

"there are, to my knowledge, at least 7 other shops in West Hull alone that sell cigarettes that they do not have in their cabinets - would have said on display but no shops are allowed to display now! They only sell to people of their nationality who get to hear about it from word of mouth. It is no wonder these shops make a 'killing', why pay £18.50 for a 50g pouch when you can pay £9 for 100g of decent baccy! Also why do these stories always mention 'serious organized crime' when the only criminals in these stories are Customs and Excise who work for the biggest mob in the country! The amount of tax on tobacco is disgraceful and if any business put such a mark up on any product there would be trading standards all over them, but hey the Government have been ripping us all off for decades!"

Again I sort of do a little jig when I read this sort of thing because if this chap knows of seven shops all flogging bootleg fags then there are likely to be many others. And we're not put off by official claims that they contain traces of all sorts of horrors. Long term smokers know perfectly well when they get a decent smoke, while those who buy rolling tobacco can see and smell what's in the pouch.

These hyped stories may play well with non-smokers and I suppose they make an issue of these seizures as a deterrent to others, but at 40 cents per pack at source the potential to quadruple your investment is far too tempting to ignore. The importer takes his cut then the retailer adds his margin and they still sell for about £2.75 a pack. The margins on rolling tobacco are even greater and if that's bought in bulk it can be repackaged into pouches that look like our favourite brands, with Belgian warning labels.

These are well known amongst smokers and let's face it, why bother trying to mimic British pouches. They carry photographs, so they're slightly more expensive to reproduce. Belgian ones are all text and in some circles there's huge kudos in seeming to be a world traveller.

There is of course much more to this than simply showing a middle finger to the government and their taxes. Naturally they harp on about profits being used to finance terrorist organizations and people traffickers. That's not what I see; in the main their profits are being used to build luxurious family homes in their (emotional) country of origin, or to accumulate a comprehensive portfolio of rental properties here in Britain. By and large they don't do extravagant cars though in one case I know of, the eldest son got a very nice pocket rocket and an apartment in his own name when he graduated from university.

Teach them well I say because they're doing us a great favour and this'll be a lucrative career move for any with real entrepreneurial spirit. The demand is there and by keeping things off the records it helps tobacco control appear to be winning the war on tobacco. So it's a win-win situation. In fact sales are likely to increase following plain packs if, as I suspect, we respond in the same way as our Australian cousins where a long term decline has been halted as noted by Guido (10) as well as Sinclair Davidson, who blogs from Australia (11) And the greater the number of people engaged in the parallel market, the greater the likelihood our tobacco will become cheaper. Neat. I like.
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Smoking Scot
September 2015