Some Indicators of
Contraband Trends in Canada
Rob Cunningham, BA, LLB, MBA
Canadian Cancer Society
2nd Bi-National Conference on
the Illicit Tobacco Trade
February 2, 2011, Toronto, Canada
Thank you
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Conclusion
• Contraband volumes have
decreased substantially in
Canada since mid-2009, but
remains at high and
unacceptable levels
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Source: Health Canada, from industry sales data reports pursuant
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to Tobacco Reporting Regulations; 0.5g of ryo = one cigarette unit
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Note: fiscal years end March
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Note: fiscal years end March
GfK studies for tobacco industry
- Full methodology not released
- No study released since
May/June 2008 study
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Philip Morris International
• "In Canada, the total tax-paid cigarette market
was up by 6.1%, primarily reflecting stronger
government enforcement measures to reduce
contraband sales.”
Philip Morris International, Oct. 22, 2009
(referring to third quarter, 2009)
• “In Canada, the total tax-paid cigarette market
was up by 20.0%, mainly reflecting stronger
government enforcement measures to reduce
contraband sales.”
Philip Morris International, July 22, 2010
(referring to first half, 2010)
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British American Tobacco
“Profit in Canada grew, benefiting from higher
volumes and a strong currency. Volume growth
was achieved on the back of a significant
reduction in illicit product as a result of the
authorities' enforcement activities. Good share
growth was achieved for the last three quarters
and leadership was gained in all price segments
although market share declined slightly versus
the first half of 2009.”
British American Tobacco, July 28, 2010 (referring to first
half, 2010
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Quebec Government
• "The removal of the Cornwall border post and the
implementation of a new Sûreté du Québec team
in the Valleyfield region have hampered the
supply of tobacco for smugglers. The scarcity of
illegal products has resulted in an increase in
legal sales of tobacco products, which should
raise the revenue from the specific tax on
tobacco products by $94 million for 2009-2010.”
Quebec, Budget documents, March 30, 2010
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Quebec Government
"a $50 million upward adjustment of
revenue from the specific tax on tobacco.
Given efforts to combat tobacco
smuggling, consumers have turned more
extensively to the legal tobacco market,
thus increasing the sales of taxed
products”
Update on Québec’s Economic and
Financial Situation, Dec. 2, 2010
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Nova Scotia
“Tobacco tax revenues are up $12.4 million from
budget. The growth in revenues is a result of
increased consumption of legal tobacco
products.”
Nova Scotia fiscal update, December 14, 2009, indicating
that revenues were 7.3% higher than forecast in budget
delivered just a few months earlier
New Brunswick
New Brunswick tobacco tax revenue increased
from $90 million in 2008-09 to $97 million in
2009-10, an 8% increase
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Why the decrease in
contraband?
• On June 1, 2009, the Canadian
border post near Cornwall was
closed, then later moved to
temporary location in Cornwall
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Akwesane, and Old, New Border Posts
Current
Border
Post
Old Border
Post (May
31, 2009)
Factories
Background map from
presentation by Michael
Harvey, 2009
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Conclusions
• Contraband volumes have decreased
substantially in Canada since mid-2009
• Why?
• How can decrease be sustained, further
improved?
• We can do it – significant decreases in
contraband can be achieved
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Thank you
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