Retailers feel impact of record year for large-scale tobacco smuggling

Increase in large seizures of illicit tobacco and cigarettes points to lucrative black market for organised crime gangs

A significant spike in major seizures of cigarette and tobacco products in 2021, suggests that the black market being exploited by crime gangs is more lucrative than ever. That’s according to Retailers Against Smuggling (RAS) reflecting on one of the busiest years for Revenue which announced 57 major tobacco seizures over the past 12 months, 14 of which had an estimated retail value of over €1 million.

Commenting on the impact felt by registered and legitimate retailers, National Spokesperson for Retailers Against Smuggling, Benny Gilsenan said: “The sheer magnitude of seizures reported by Revenue this year vindicates our concerns that tobacco smuggling is on a sharp rise. This is resulting in a rapidly growing black market which retailers like myself simply cannot compete against. It’s clear that criminal gangs are taking advantage of the tidy profits that can now be made from illicit tobacco while undercutting legitimate retail prices. The large consignments we’re seeing seized, primarily at our major ports, is just the tip of the iceberg.  We know that the majority of illicit product being smuggled into the country is finding its way onto the black market hitting the bottom line of registered retailers.”

A RAS analysis of Revenue announcements made via press release in 2021 vs 2020 shows:

• A total of 57 major seizure announcements were made in 2021, up 24.
• 14 of these seizures were valued over €1 million, up four.
• Over 50.2 million cigarettes were seized, up 2.1 million from last year.
• Over 35.5 tonnes of loose and roll your own tobacco was seized, up 28.4 tonnes.
• 28 major seizures were made at Dublin Port and Rosslare Europort, up 15.
• The total estimated retail value of seizures to date is over €57.1 million, up €24.4 million.

Organised crime gangs behind tobacco black market activity

Mr Gilsenan continued: “The discovery of 906kg of tobacco linked with last month’s €9.8m drugs seizure at Dublin Port clearly indicates the type of organised crime gangs behind large-scale tobacco smuggling. We continue to argue that the current Government policy of placing annual excise increases on tobacco products is making illicit tobacco trade a more lucrative and appealing market for these gangs. This is further fuelled by growing consumer demand as smokers are forced to turn to the black market due to duty paid tobacco products sold by registered retailers becoming too expensive.

“There is growing apprehension among the retail community that the financial incentives for gangs bringing product onto the black market now far outweigh any risks. For example, other than the possibility of the product being detected and seized, there appears to be no obvious deterrents such as meaningful court prosecutions which might make criminals think twice about smuggling large-scale illicit tobacco consignments into the country. We can also be sure that criminal gangs account for in advance the projected percentage loss associated with the detection and seizure of product.”

Detection and prevention key to stemming tobacco smuggling

Mr Gilsenan concluded: “At the same time we must fully commend the work undertaken by Revenue and Customs officers this year to yield such an increase in large-scale seizures, particularly at our major ports. It’s also encouraging to see continued investment in technology like the state-of-the-art mobile x-ray container scanner deployed at Rosslare Europort, to help officers successfully detect illicit product. These detection efforts are critical in stemming supply into the black market, protecting both the Exchequer and registered retailers.

“However, until key individuals behind these crime gangs are targeted and handed appropriate prosecutions, they will continue to find more sophisticated means to smuggle large shipments of illicit tobacco. Financially, tobacco smuggling has now become a core pillar of the business models for these gangs. As a preventative approach at Government level, greater focus needs to be placed on delivering robust prosecutions and in turn strengthening the deterrent to engage in tobacco smuggling.