Fair Store" Program expands to online retailers in Russia

According to Vladlen Maksimov, the head of the Small Business Association, the federal information and education program "Honest Store", which was created in 2019 to combat the illegal distribution of tobacco products, will soon expand to online retail.

The Fair Store initiative involves law-abiding retailers educating consumers about the risks of illegal cigarettes and providing informational materials on how to verify the legality of purchased cigarettes. Over the past three years, the program has expanded to include traditional trade, beginning in areas with the highest percentage of illegal sales and now encompassing thousands of small trade representatives in over 80 regions across the country.

“Today we have entered the next stage of the plan - with the support of the Russian Ministry of Industry and Trade, the plan is now entering retail chains. Retail chains, as the largest channel for informing consumers, will provide an opportunity to expand the scale of information dissemination activities aimed at combating illicit trade in tobacco products. Therefore, we hope that retail chains will respond as soon as possible and participate in the plan to inform consumers about how to check the legality of cigarettes,” said Maksimov.

Yulia Yudina, director of the department of circulation of specific types of goods for the domestic trade development division of the Ministry of Industry and Trade of Russia, emphasized that "spreading information through the Honest Store program is a very important step.

The objective of this initiative is to raise awareness among the business community and consumers about the illegal trade of Russian tobacco products. The Russian Ministry of Agriculture sets an annual minimum price for cigarettes, serving as a clear and transparent standard for consumers to determine the legality of the products. Additionally, a numerical method is used to verify the legitimacy of cigarettes, and those who violate legislation in the tobacco products trade will be held responsible.

Since 2015 and continuing through 2022, the illicit tobacco market in Russia has increased its share by 1000% to reach 12.1%, with continued growth projected. In terms of quantity, the illegal circulation of cigarettes throughout the country is expected to exceed 1.3 billion packages this year. Experts predict that by 2022, the loss to the federal budget due to illicit tobacco will reach 113 billion rubles, including 88 billion rubles in uncollected consumption tax and 25 billion rubles in uncollected value-added tax.

Industry insiders point out that the main prerequisite for the growth of the illegal tobacco market nowadays is the difference in consumption tax (and corresponding cigarette prices) between Russia and Eurasian Economic Union countries. Experts believe that this contributes to the growth of the illegal market and the suspension of unplanned inspections for small and medium-sized enterprises this year, resulting in a sharp decrease in the number of control measures.

According to Vladimir Zasravsky, deputy director of the Russian Ministry of Industry and Trade's digital labeling and product circulation legalization system, there was no test purchase conducted in 77 regions of Russia during the second quarter of 2022 due to a suspension. As a result, the number of inspections conducted decreased by 3.5 times and the number of illegal regulations enacted decreased by 4.5 times.

The supply of illegal cigarettes in the population remains high," summarized Zaslavsky.

Industry insiders are convinced that lifting the suspension of commercial inspections related to taxed products can improve market conditions.

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