Iran’s Ministry of Industries, Mining and Trade estimates that up to 40% of all cigarettes consumed in the country are smuggled.
One of the State Center for Tobacco Planning and Supervision’s most crucial responsibilities, therefore, is the pursuit and prosecution of tobacco smuggling cases. According to its own data, the center has been delivering quite an impressive job in curbing the illegal activity, claiming a reduction of 77% in cross-border cigarette smuggling in 2017 alone. But, new laws aimed at greatly reducing the amount of foreign brand imports in favor of their domestic production also may have played a role in achieving that success.
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Companies like JTI, for example, have been manufacturing their brands locally since well over a decade. This has considerably brought down the retail price of foreign premium brand cigarettes to an average of IRR45,000 (US$1.07) per pack compared to IRR65,000 (US$1.55) for imports. And that legal – and affordable – availability may just deter many consumers from taking the risk associated with sourcing illicit cigarettes, a criminal offense carrying stiff penalties.
But of course, that doesn’t mean that smuggling has been eliminated completely. There still exists a sizeable contraband market. A case in point is Marlboro, a brand widely regarded by many Iranians as a fashionable, coveted symbol of the “western lifestyle”. A source very familiar with Iran’s tobacco industry told Tobacco Asia on condition of anonymity that at present “literally all Marlboro cigarettes you find in the country are smuggled as the brand owner [PMI] currently neither has a local subsidiary nor local importer.” A pack of smuggled Marlboros, therefore, goes for as much as IRR200,000 ($4.80), a princely sum for many Iranians, yet “a quite acceptable price in some parts of Tehran”, according to the source.
But the source also said there had been “news that the brand will become available in the market legally in the near future”. This information seems to be substantiated by an article published in the Financial Times newspaper late last year, which quoted an unnamed person “with knowledge of Iran’s tobacco market” as saying that Philip Morris International was “expected to enter the market” soon. If this should indeed happen, it will be most interesting to see what effect it is going to have on cigarette smuggling figures… and of course the market shares of the other foreign players already operating in the country.