Illegal Tobacco Trade Costs Russia 81.5 Billion Rubles in 2022

On April 28, Vladislav Zaslavsky, Acting Head of the Digital Commodity Marking System Department at Russia's Ministry of Industry and Trade, reported that the nation's illegal tobacco trade led to losses of 81.5 billion rubles in 2022.

Zaslavsky shared these figures at a roundtable discussion focused on combating illicit trade in tobacco and nicotine products. The estimates come from the National Scientific Center for Combating Illegal Industrial Products (ANONNCCK).

"According to the highest estimates, this figure exceeded 100 billion rubles," he said.

Zaslavsky also noted that, according to ANONNCCK data, the proportion of illegal cigarettes among the smoking population in 2022 was 12.2%. He added, "The share of illegal nicotine products reached 79% by the end of 2022, and (illegal nicotine products) e-liquid accounted for 93%. This further increased the estimated national loss of 3 billion rubles."

He explained that the market is expected to undergo fundamental changes through the enactment of a dedicated law regulating the tobacco and nicotine products market, which is currently under review in the State Duma.

Zaslavsky highlighted that the bill provides for a mandatory licensing system for the production and import of tobacco, nicotine products, and raw materials, requiring manufacturers to register key production equipment and take other measures to cleanse the market.

The bill also proposes transferring the authority of the Ministry of Agriculture to regulate the tobacco market to the Ministry of Finance and reorganizing the Russian Alcohol Regulatory Authority into the Federal Agency for Alcohol and Tobacco Market Supervision - the Russian Alcohol and Tobacco Regulatory Authority.

According to roundtable participants, the spread of illegal products is partly due to the suspension of commercial inspections. In this context, Zaslavsky believes a risk-oriented regulatory approach should be adopted.

He stated that the marking system providing product traceability (Honest Label) could form the basis for a risk management system, requiring only the integration of the regulatory framework with the data usage in the system to achieve regulatory activities.

He said that 11 indicators were developed to identify potential violations in the tobacco market. According to the Russian Federal State Statistics Service, Russia produced 222 billion cigarettes in 2022, a 7% decrease compared to 2021.