Russia is facing a growing problem of pirated tobacco flooding its domestic market, with the volume of counterfeit cigarettes rising sharply in the last year, including several incidents in which illegal supplies of cigarettes were found to have originated in China.
In June 2014, the Russian government introduced a ban on the open display of cigarettes in stores. Since then it has been prohibited to put cigarettes in display cases.
Sergei Kiselyov, vice president of corporate affairs and communications at Japan Tobacco International (JTI) stated that “on the whole, the introduction of the ban on open display probably went against the interests of the government and the consumer.” He further explained that it was now difficult for the consumer to identify if they were buying a legal or counterfeit product.
According to Kiselyov, one of the reasons for the growth of counterfeit tobacco is the ban on the open display of cigarettes in stores. Moreover, JTI says the substantial growth of counterfeit tobacco is also conditioned by the growth of excise rates.
Experts say Chinese production constitutes just 1% of counterfeit tobacco in Russia, since until recently Chinese tobacco was shipped to Western Europe, where prices are significantly higher than in Russia. However the growth in excise duty means that Russia has also become an interesting market for illegal producers. The remaining 99% of counterfeit tobacco in Russia is produced internally and in Ukraine.