Suzanne Shep­pard

Man­ag­ing di­rec­tor of West In­di­an To­bac­co (Wit­co) Jean-Pierre du Coudray is con­cerned about the rapid­ly ex­pand­ing black mar­ket for to­bac­co prod­ucts in T&T. He told the com­pa­ny's share­hold­ers it is one of the ma­jor chal­lenges fac­ing the com­pa­ny."What we have seen in 2014 was a no­tice­able in­crease on the mar­ket of low priced brands which we be­lieve are in our mar­ket il­le­gal­ly," he said in his ad­dress at Wit­co's 110th an­nu­al gen­er­al meet­ing at the Hy­att Re­gency, Port-of-Spain, yes­ter­day.

"The il­lic­it traf­fick­ing of to­bac­co is a multi­bil­lion-dol­lar busi­ness to­day, fu­elling or­gan­ised crime and cor­rup­tion, de­priv­ing gov­ern­ments of much need­ed tax­es."Du Coudray said there were al­so "un­in­tend­ed con­se­quences" from the il­lic­it trade, such as the low prices at which black mar­ket cig­a­rettes are sold mak­ing it eas­i­er to get in­to the hands of mi­nors.

He said: "We be­lieve gov­ern­ments have a pri­ma­ry re­spon­si­bil­i­ty to tack­le il­lic­it trade through ap­pro­pri­ate tax­a­tion poli­cies, strong leg­is­la­tion and ef­fec­tive en­force­ment; we are will­ing to work with the au­thor­i­ties to ad­dress the mat­ter as it is of great con­cern to us."

Lat­er, in an in­ter­view with the T&T Guardian, Du Coudray ex­plained that T&T is one of the high­est ex­cised coun­tries in Cari­com and this has cre­at­ed an op­por­tu­ni­ty for black mar­ket ac­tiv­i­ty. He said the cig­a­rette smug­glers have a very strong com­pet­i­tive ad­van­tage be­cause they are avoid­ing all the ex­cise and im­port du­ties.

"We have seen a lot of these brands com­ing in the mar­ket since 2010," he said, link­ing that de­vel­op­ment to a 15 per cent in­crease in the ex­cise du­ty on to­bac­co prod­ucts in­tro­duced in the na­tion­al bud­get for that year.Du Coudray said Wit­co is open to work­ing with the au­thor­i­ties on so­lu­tions to the prob­lem be­cause the smug­glers are mak­ing large prof­its and the more their smug­gling and dis­tri­b­u­tion lines gets es­tab­lished, the more dif­fi­cult they will be to stop.

"These guys are very or­gan­ised. We not talk­ing suit­cas­es here, we're talk­ing con­tain­ers. It is or­gan­ised crime, smug­gling and net­work­ing," he said.

He said the black mar­ket was tak­ing root in the three Cari­com coun­tries with the high­est tax­es on cig­a­rettes: Ja­maica, Suri­name and T&TA fact sheet which ac­com­pa­nied Wit­co's an­nu­al re­port showed that up to 600 bil­lion cig­a­rettes a year are il­le­gal. That is up to 12 per cent of world con­sump­tion. Cig­a­rettes are among the most com­mon trad­ed prod­ucts on the black mar­ket due to high prof­it mar­gins, rel­a­tive ease of pro­duc­tion and move­ment and low de­tec­tion rates and penal­ties.

It is es­ti­mat­ed that gov­ern­ments world­wide are los­ing up to US$40 bil­lion a year in ex­cise and oth­er tax­es as a re­sult of that il­lic­it trade.Du Coudray said Wit­co still man­aged to record a strong fi­nan­cial per­for­mance, with prof­it be­fore tax of $655.1 mil­lion, be­cause of "a very dy­nam­ic port­fo­lio with three very strong brands: Dun­hill, Du Mau­ri­er and Broad­way."

"Each of those brands have a very strong loy­al­ty and a very strong rel­e­vance and al­though there are many cheap brands in the mar­ket, at the mo­ment the strength of our brands seems to be deal­ing with that threat."How­ev­er, over time if the ex­cise was to in­crease, or the eco­nom­ic sit­u­a­tion wors­ens, you may find peo­ple hav­ing no choice but to move from our brands to the cheap­er ones," he said.