The Rise of Illicit Tobacco Trade in Turkey

In Istanbul's Kadıköy district, Kemal and his friends run a tekel, a shop that sells alcohol and tobacco. Nostalgic Turkish music from the 80s plays over the smoky speaker system. Today's specials include two different types of imported Spanish beer: Daura and Estrella. Illegal cigarettes are openly sold behind the counter.

When his colleague, a middle-aged retired man from the central Anatolian city of Kayseri, handled the daily operations, Kemal made sure everyone had a cup of tea and began explaining their sale of two types of illegal cigarettes.

Expensive menthol cigarettes are being smuggled from Iran as Turkey banned them in 2020. Cheaper pre-rolled cigarettes have become more popular as they are priced at 14 lira (approximately 5.4 yuan), which is half the price of regular packaged cigarettes.

The recent economic crisis, characterized by an annual inflation rate between approximately 84.39% and an unofficial 170.70%, has forced people to look for alternative solutions.

Hirar, fresh out of film school, was taking a smoking break at a cultural center located two blocks away from Tekel in Kemer. Together with four other recent graduates, they established a non-profit venue that offers local youth free cultural opportunities.

Although she had cigarettes in hand, she has been preferring to smoke cheap Parley loose-leaf tobacco and buying cheap pre-rolled cigarettes regularly in recent days. When she started smoking, a pack of cigarettes cost 9 or 10 lira (equivalent to about 3.3-3.7 yuan). Nowadays, it has almost tripled in price, leading her to seek more affordable options. She is not the only one; her friends often purchase cigarettes smuggled from Iran or Iraq, but they have also seen price hikes, she commented.

200 billion cigarettes

Inflation and increased taxes have fueled the smuggling of cigarettes and the self-rolling or purchase of pre-rolled cigarettes. Between 2019 and 2020, Turkey's legitimate cigarette sales decreased by 2 billion units. The population smoked approximately 118 billion units of legally manufactured cigarettes, and burned around 20 billion units of hand-rolled and smuggled cigarettes.

According to Fuat Oğuz, an economics professor at Ankara Yıldırım Beyazıt University, illegal tobacco accounts for approximately 20% of all tobacco sales in Turkey, resulting in an annual tax revenue loss of 2.5 to 30 billion Turkish liras.

On December 10th, the government released a new amendment in order to combat the illegal tobacco trade. Individuals who sell tobacco without authorization may now face a maximum of 2 to 5 years in prison. Additionally, recent crackdowns and inspections throughout the country have resulted in numerous seizures and detentions.

Three weeks ago, authorities seized 650 kilograms of illicit tobacco, 4,200 cigarette packs, and 2,700 empty filters in Eşkişehir, located in the city center. One week later, in Istanbul, the police detained 17 individuals and confiscated 11.53 million packs of smuggled cigarettes and 214 kilograms of tobacco.

Cigarette smuggling has always existed.

However, Kamal is not worried about getting caught. Most tekels on the street sell illegal cigarettes, and the local authorities turn a blind eye to it. When a police car drives down the street looking for a parking spot, Kamal doesn't hesitate to make sure they can park in front of the store.

There has always been cigarette smuggling in Turkey," he explained. Prior to Turgut Özal's rise to power in 1983, foreign brands such as Marlboro were secretly brought into the country as importing cigarettes was illegal.

From 1983 to 1989, Turgut Özal served as the 26th Prime Minister of Turkey and implemented extensive neoliberal economic reforms. He appointed his son, Ahmed Özal, to assist in the opening up of the predominantly state-owned tobacco market. In 1983, he allowed the importation of foreign brand cigarettes, and in 1991, foreign companies were permitted to distribute and produce their own cigarettes in Turkey.

As a result, between 1990 and 2000, the consumption of foreign cigarette brands increased by 46 times in this country. In the same period between 1990 and 1999, cigarette consumption grew by 52%, making this country one of the largest cigarette consumers in the world. In contrast, global cigarette consumption declined by 4% during this period.

After the infiltration of multinational tobacco companies and the financial crisis, Turkey, historically one of the main tobacco-producing countries, began to rely on imported tobacco. In the 1990s, the government was forced to cut public welfare spending, such as subsidies for tobacco cultivation.

Turkey's share of global tobacco production has decreased from 4% in the 1990s to 1.7% in 2012, as a result of declining yields. In 2003, Turkish cigarette manufacturers used 42% locally grown tobacco, but this has now decreased to 11% because foreign companies have been choosing Virginia varieties over traditional Turkish tobacco. As a consequence, Turkey has experienced a tobacco trade deficit in 2020, exporting tobacco products worth $992 million while importing over $1.2 billion.

Galatasaray, Kayserispor, and NATO cigarettes.

The privatization of tobacco has significantly altered the products sold in local tobacco shops. With a strong sense of nostalgia, Kemal began naming countless local cigarette brands, such as Çamlıca, Maltepe, Tekel, Samsun, Bafra, Yenibahar, Sipahi, Asker, Birinci and İkinci, Meltem, Polis, and Tokat. His colleagues eagerly opened up Google to find pictures of Galatasaray, Kaseri Spor, and NATO cigarettes.

Today, the only packaging that reminds people of the past that is still sold frequently in shops is Tekel. However, this brand is no longer in the hands of the locals. The state-owned tobacco and alcohol company, Tekel, which means "monopoly" in Turkish, was sold to the British-American Tobacco Company in 2008 for a price of $1.72 billion.

Today, Marlboro Touch Blue is one of the best-selling cigarettes at Kemal's store, with a counter price slightly above 30 lira (approximately 11 yuan in Chinese currency).

Before the New Year's Day in 2021, cigarettes cost around 20 lira (approximately 7.47 RMB). However, in January 2021, the tax on cigarettes increased by 47%, causing concerns that a new price hike in 2023 will be given as a New Year's gift.

Kemal and his colleagues seem unconcerned. They continue to buy cigarettes as Kemal smokes and drinks tea. A recent survey conducted by NG research company confirms this, as three-quarters of people over the age of 15 admit that the increase in cigarette prices has not led to a decrease in smoking.