Cigarettes of smuggled foreign brands and counterfeits in Sri Lanka have risen to 29 per cent of the market in the third quarter of 2023, it was reported.
A periodic survey by the Colombo-based Research Intelligence Unit has found that Sri Lanka’s legal cigarette sales are in long-term decline.
The survey also reports that there has been a tendency for Sri Lanka’s non-tax-paid cigarettes to go up.
RIU says the key reasons for the rise in illicit sales were a currency crisis and inflation which had reduced purchasing power and tax hikes which had made smuggled products more competitive.
After two tax hikes in 2023, the legal product was around Rs. 125 for a cigarette stick, while the smuggled products were around Rs. 80 to Rs. 100.
As per the survey, a brand called ‘Manchester’, was widely smuggled from East Asia.
RIU said a fall in smuggled cigarettes came from forex shortages and import controls in 2022, with legal cigarette sales rebounding to 2,825 million stocks and illicit sales down to 538 million stocks, bucking recent trends with the share down to 16 per cent.
However in the first half of 2023, after the first tax hike and gradual normalization of trade, monthly illegal cigarettes were estimated to be around 58.7 million sticks, annualized to 716 million sticks.
After a second price hike, monthly sales were estimated to have increased to 74.8 million stocks or around 898 million sticks a year.
The survey, based on interviews with 2,500 individuals, says legal sales are projected to fall to 2.3 billion sticks, leading to an illegal share of 29 per cent. (NewsWire)