Massive Tobacco faces massive EU counterfeit downside By Reuters - Stock Region News



Wednesday, May 31, 2023

Massive Tobacco faces massive EU counterfeit downside By Reuters


© Reuters. A Spanish Civil Guard officer handles materials from containers containing unlawful tobacco throughout a raid the place greater than 3.5 million packets of contraband tobacco have been seized, in Seville, Spain, on this image launched on January 22, 2023. Guardia Civil/Handou


By Richa Naidu, Emma Pinedo and Emilio Parodi

MADRID (Reuters) – Spanish police raided three clandestine tobacco factories early this 12 months, seizing practically 40 million euros ($44 million) value of tobacco leaf and illicit cigarettes.

At one, within the northern city of Alfaro, they discovered 10 Ukrainian employees, 5 of them conflict refugees, who’d been put to work with no contracts and scant pay, police stated. They labored all day for and lived on the manufacturing facility, forbidden from leaving.

This operation is one among dozens throughout the EU that regional policing and anti-fraud companies say have pushed seizures of illicit cigarettes to report ranges.

Crime teams, which have historically primarily sourced faux tobacco merchandise from exterior the EU, are more and more establishing manufacturing services in western Europe to be nearer to higher-priced markets, in line with Reuters interviews with half a dozen specialists within the area, together with enforcement officers, tobacco executives and business analysts.

The development was revved up by the journey shutdown of the COVID-19 pandemic, which choked provides from exterior the bloc, the European Anti-Fraud Workplace (OLAF) stated. It might have been additional accelerated by the conflict in Ukraine, which for years has been a manufacturing hub and transit route for illicit tobacco, OLAF added.

In addition to the human price, counterfeiting is a monetary thorn within the facet of the world’s greatest tobacco corporations at a time after they’re dealing with a world decline in smoking that is spurred giant investments in different merchandise like vapes.

“Legal gangs have switched from importing counterfeit merchandise into Europe to establishing illicit manufacturing services inside EU borders,” stated Cyrille Olive, British American Tobacco (NYSE:)’s (BAT (LON:)) regional head of anti-illicit commerce.

BAT – one among tobacco’s world giants with Imperial Manufacturers (OTC:), Japan Tobacco (OTC:) and Philip Morris Worldwide (NYSE:) – has seen elevated counterfeiting since final 12 months in France, the Netherlands, Portugal, Slovenia, Denmark and the Czech Republic, Olive added.

Some campaigners have accused Massive Tobacco of overstating the dimensions of the illicit market to assist foyer in opposition to larger taxes – one thing the businesses deny. Nonetheless, the newest knowledge reveals seizures of illicit cigarettes are growing.

A report 531 million illicit cigarettes have been impounded throughout the EU final 12 months, an increase of 43% from the roughly 370 million seized in 2020, in line with knowledge from OLAF. About 60% of the cigarettes have been from illicit manufacturing within the bloc whereas the remainder have been smuggled in.

Europol informed Reuters that final 12 months would additionally seemingly set a report for the variety of unlawful cigarette factories that have been reported shut down by nationwide police forces, though the full-year knowledge is not but accessible.


The business has responded by hiring investigators to analysis illicit operations and share intelligence with European authorities, executives at Japan Tobacco, BAT and Imperial Manufacturers informed Reuters.

The three tobacco majors declined to place a determine on the monetary hit from the illicit commerce. Japan Tobacco has, although, spent “lots of of tens of millions of {dollars}” gathering data on the counterfeiters which it then passes on to European authorities like OLAF, in line with Vincent Byrne, head of the corporate’s anti-illicit commerce operations.

“We now have a devoted perform throughout the firm to attempt to shield our property, shield our manufacturers, and fight unlawful commerce,” stated Byrne, a former detective who investigated organised crime in Eire.

BAT and Imperial Manufacturers stated in addition they had intelligence operations.

Philip Morris Worldwide declined to remark for this text.


Counterfeiters usually replicate well-liked cigarette manufacturers, which embody Japan Tobacco’s Winston, Philip Morris’ Marlboro, British America’s Dunhill and Imperial Manufacturers’ Nobel.

A packet of 20 cigarettes prices lower than a euro to make, stated Byrne, however trades at a number of instances that, relying on {the marketplace}.

Provides from China and different components of Asia – which was once the most important sources of counterfeit cigarettes that ended up within the EU – shrank throughout COVID-19 lockdowns, spurring growing manufacturing in Europe itself, in line with Alex McDonald, head of group safety at Imperial Manufacturers.

Russia’s invasion of Ukraine might have quickened that development, stated Ernesto Bianchi, OLAF’s director of income and worldwide operations, investigations and technique, including that the company was “analysing how the fraudsters might have reconfigured their routes”.

Ukraine had been a hub for the manufacturing of illicit tobacco and a provide route for illicit and counterfeit cigarettes made in Russia and Belarus, actions that will have been disrupted by the conflict, Imperial Manufacturers’ McDonald stated.

Some counterfeiters are luring and coercing Ukrainian refugees to be employees.

An unlawful tobacco manufacturing facility was dismantled final month in Roda de Ter, 80 km from Barcelona, Spanish police stated on Thursday. Officers seized 11,400 kilos of tobacco and seven,360 packets of cigarettes. Six Ukrainians have been discovered working there.

In Italy, officers stated in April final 12 months that they had discovered about 82 tonnes of counterfeit cigarettes inside a manufacturing facility within the industrial space of the nation’s ​​Pomezia municipality.

Investigators stated they discovered Russian, Moldovan and Ukrainian employees doing gruelling shifts in an unsafe surroundings the place walled-up home windows stopped fumes escaping.

“A great many employees from Ukraine have been present in these unlawful factories,” Japan Tobacco’s Byrne stated about counterfeiting operations throughout the EU.

“They’re collected in a van at an airport, blacked out home windows, pushed round and swapped into one other van,” Byrne, stated recounting a specific incident.

“Ultimately they’re delivered to the manufacturing facility. Cellphones are taken from them. Primarily, it is a type of modern-day slavery.”

($1 = 0.9310 euros)

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