Downloaded from http://tobaccocontrol.bmj.com/ on October 13, 2015 - Published by group.bmj.com
TC Online First, published on May 22, 2015 as 10.1136/tobaccocontrol-2015-052398 Research letter
Is the illicit cigarette market really growing? The tobacco industry’s misleading math trick The tobacco industry regularly uses the threat of increased illicit cigarette trade to dissuade governments from implementing prohealth policies. Illicit trade is the number one argument used by the tobacco lobby to oppose tobacco tax increases,1 and is also being used against implementation of other major tobacco control measures such as plain packaging, display bans and pack size restrictions.2 Studies funded and presented by cigarette manufacturers and their business associations are generally not peerreviewed or replicable and therefore, do not meet standards of academic research.3 A growing body of evidence suggests that estimates of the illicit cigarette trade levels presented in the industry-commissioned reports are often inflated.4–10 Another tactic used by the tobacco industry to exaggerate the scope of the illicit cigarette trade problem is to use illicit cigarette market share rather than the absolute number of illicit cigarettes smoked when presenting trends in the illicit cigarette market. Relying on market share (the number of illicit cigarettes as a percentage of the number of all cigarettes, both legal and illicit combined) is problematic, because the illicit market share can increase even while the actual number of illicit cigarettes smoked is decreasing. Table 1 illustrates this problem using industry data from Poland. Although between 2009 and 2013, according to an industry-commissioned study, illicit cigarette consumption declined by nearly one billion sticks, from 7.07 billion to 6.1 billion; however, the illicit market share
increased by over two percentage points, from 11.8% to 13.9%, because legal consumption declined faster than illicit consumption.11 The tobacco industry, using only the market share, claimed in public debate in Poland that illicit cigarette trade was increasing12 while actually, in absolute terms, it was declining. To study the extent to which illicit market share misrepresents trends in illicit cigarette market globally, I used data from Euromonitor,13 a market research company. Although there are some concerns around the reliability of Euromonitor illicit trade data,14 no other comparable global data exist. Euromonitor provides estimates of illicit cigarette market volumes as well as total cigarette market volumes for 80 countries worldwide. I extracted 2005–2013 data for these 80 countries from the Euromonitor database and for each country identified pairs of any 2 years within that time period (36 combinations) with a pattern of declining illicit cigarette volume and rising illicit market share. I found that relying on the illicit market share measure misrepresents actual trends in illicit cigarette consumption in most of the countries. In total 43 of the 80 Euromonitor countries (54%) had a period of time, between 2005 and 2013, with an increase in illicit market share and a decline in illicit market volume (see supplementary appendix 1 for the list of those countries). Relying on illicit market share as a measure of illicit cigarette market size often gives a wrong impression about actual trends in illicit cigarette consumption. With the implementation of effective tobacco control measures, cigarette consumption is falling in most nations.15 In fact, it seems that tobacco control policies are effective in reducing consumption of legal and illegal cigarettes.16 Since tobacco control measures act predominantly to
Table 1 The tobacco industry estimates of legal and illegal cigarette consumption in Poland
A B C=A+B D=A/C
Illicit cigarette consumption (in billion) Legal cigarette consumption (in billion) Total cigarette consumption (in billion) Illicit market share 11
2009
2013
2009–2013 change (%)
7.07 52.63 59.7 11.8%
6.1 37.66 43.76 13.9%
−13.7 −28.4 −26.7 17.7
5 7
Source: KPMG. KPMG numbers might be inaccurate. Numbers in the table are presented to show a pattern rather than to report the exact number of legal and illegal cigarettes consumed.
decrease legal cigarette consumption, legal consumption declines faster than consumption of illegal cigarettes. In such cases, illicit market share will grow even with illicit cigarette consumption declining in absolute terms. Tobacco control researchers, health advocates and the media should be aware of these patterns and when reporting trends in illicit cigarette smoking should use absolute numbers of illicit cigarettes consumed rather than the illicit market share.
Key messages ▸ The tobacco industry uses a little “sleight of hand” to misrepresent trends in illicit tobacco trade to serve their narrative of an existing or looming problem. In many cases, their claims articulate a half-truth at best. ▸ The illicit market share, a measure widely used by the industry, can misrepresent actual trends in illicit cigarette consumption: while in many countries in absolute terms the illicit cigarette consumption declines, the illicit market share increases, because legal cigarette consumption declines faster than consumption of illicit cigarettes.
Michal Stoklosa Correspondence to Michal Stoklosa, Economic and Health Policy Research, American Cancer Society; [email protected] Acknowledgements The author would like to thank Jeffrey Drope and John Daniel for their valuable input and comments. Competing interests None declared. Provenance and peer review Not commissioned; externally peer reviewed. ▸ Additional material is published online only. To view please visit the journal online (http://dx.doi.org/10. 1136/tobaccocontrol-2015-052398). To cite Stoklosa M. Tob Control Published Online First: [ please include Day Month Year] doi:10.1136/ tobaccocontrol-2015-052398 Received 9 April 2015 Accepted 6 May 2015 Tob Control 2015;0:1–2. doi:10.1136/tobaccocontrol-2015-052398
Tob Control Month 2015 Vol 0 No 0
Copyright Article author (or their employer) 2015. Produced by BMJ Publishing Group Ltd under licence.
1
Downloaded from http://tobaccocontrol.bmj.com/ on October 13, 2015 - Published by group.bmj.com
Research letter REFERENCES 1
2
3
4
5
2
Smith KE, Savell E, Gilmore AB. What is known about tobacco industry efforts to influence tobacco tax? A systematic review of empirical studies. Tob Control 2013;22:144–53. Stoklosa M. Illicit trade. In: Eriksen M, Mackay J, Schluger N, et al., eds The tobacco atlas. 5th edn. Atlanta, GA: The American Cancer Society, Inc., 2015. http://www.tobaccoatlas.org/topic/ illicit-cigarette-trade/ (accessed 9 Apr 2015). Hatchard JL, Fooks GJ, Evans-Reeves KA, et al. A critical evaluation of the volume, relevance and quality of evidence submitted by the tobacco industry to oppose standardised packaging of tobacco products. BMJ Open 2014;4:e003757. Adams M, Effertz T. Tabaksteuern, Schmuggel und unversteuerte Zigaretten—Zur Glaubwürdigkeit der„ Entsorgungsstudie” der Tabakindustrie [Excise Taxes on Tobacco and the Problem of Smuggling— Concerning the Credibility of the Tobacco Industry’s “Discarded-Cigarette Packages-Study”]. Gesundheitswesen 2011;73:705–12. Stoklosa M, Ross H. Contrasting academic and tobacco industry estimates of illicit cigarette trade:
6
7
8
9
10
11
evidence from Warsaw, Poland. Tob Control 2014;23:e30–4. Chen J, McGhee SM, Townsend J, et al. Did the tobacco industry inflate estimates of illicit cigarette consumption in Asia? An empirical analysis. Tob Control Published Online First: 6 Jan 2015. doi:10.1136/tobaccocontrol-2014-051937 Gilmore AB, Rowell A, Gallus S, et al. Towards a greater understanding of the illicit tobacco trade in Europe: a review of the PMI funded “Project Star” report. Tob Control 2014;23:e51–61. van Walbeek C. Measuring changes in the illicit cigarette market using government revenue data: the example of South Africa. Tob Control 2014;23:e69–74. Rowell A, Evans-Reeves K, Gilmore A. Tobacco industry manipulation of data on and press coverage of the illicit tobacco trade in the UK. Tob Control 2014;23:e35–e43. Clarke H, Prentice D. Will plain packaging reduce cigarette consumption?. Econ Pap J Appl Econ Policy 2012;31:303–17. KPMG. Project Sun. A study of the illicit cigarette market in the European Union. 2013 Results. 2014. http://www.
12
13 14
15
16
pmi.com/eng/media_center/media_kit/documents/sun% 20report%202013.pdf (accessed 9 Apr 2015). Pracodawcy RP (members: Philip Morris Polska and British American Tobacco Polska). Szara strefa wyrobów tytoniowych w latach 2011–2014. Nowe trendy i zagrożenia. http://www.pracodawcyrp. pl/download/gfx/kpp/en/defaultaktualnosci/20/569/1/ szara_strefa_wyrobow_tytoniowych_w_latach_ 2011-2014_nowe_trendy_i_wyzwania_-_raport.pdf (accessed 29 Apr 2015). Euromonitor International. Passport database. London, UK: Euromonitor International, 2014. Blecher E, Liber A, Ross H, et al. Euromonitor data on the illicit trade in cigarettes. Tob Control 2015;24:100–1. Ng M, Freeman MK, Fleming TD, et al. Smoking prevalence and cigarette consumption in 187 countries, 1980–2012. JAMA 2014;311:183–92. Blecher E. Commentary on Joossens et al. (2010): eliminating the global illicit cigarette trade—what do we really know? Addiction 2010;105:1650–1.
Tob Control Month 2015 Vol 0 No 0
Downloaded from http://tobaccocontrol.bmj.com/ on October 13, 2015 - Published by group.bmj.com
Is the illicit cigarette market really growing? The tobacco industry's misleading math trick Michal Stoklosa Tob Control published online May 22, 2015
Updated information and services can be found at: http://tobaccocontrol.bmj.com/content/early/2015/05/22/tobaccocont rol-2015-052398
These include:
Supplementary Supplementary material can be found at: Material http://tobaccocontrol.bmj.com/content/suppl/2015/05/22/tobaccocon trol-2015-052398.DC1.html
References
This article cites 10 articles, 4 of which you can access for free at: http://tobaccocontrol.bmj.com/content/early/2015/05/22/tobaccocont rol-2015-052398#BIBL
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Notes
To request permissions go to: http://group.bmj.com/group/rights-licensing/permissions To order reprints go to: http://journals.bmj.com/cgi/reprintform To subscribe to BMJ go to: http://group.bmj.com/subscribe/
TC Online First, published on May 22, 2015 as 10.1136/tobaccocontrol-2015-052398 Research letter
Is the illicit cigarette market really growing? The tobacco industry’s misleading math trick The tobacco industry regularly uses the threat of increased illicit cigarette trade to dissuade governments from implementing prohealth policies. Illicit trade is the number one argument used by the tobacco lobby to oppose tobacco tax increases,1 and is also being used against implementation of other major tobacco control measures such as plain packaging, display bans and pack size restrictions.2 Studies funded and presented by cigarette manufacturers and their business associations are generally not peerreviewed or replicable and therefore, do not meet standards of academic research.3 A growing body of evidence suggests that estimates of the illicit cigarette trade levels presented in the industry-commissioned reports are often inflated.4–10 Another tactic used by the tobacco industry to exaggerate the scope of the illicit cigarette trade problem is to use illicit cigarette market share rather than the absolute number of illicit cigarettes smoked when presenting trends in the illicit cigarette market. Relying on market share (the number of illicit cigarettes as a percentage of the number of all cigarettes, both legal and illicit combined) is problematic, because the illicit market share can increase even while the actual number of illicit cigarettes smoked is decreasing. Table 1 illustrates this problem using industry data from Poland. Although between 2009 and 2013, according to an industry-commissioned study, illicit cigarette consumption declined by nearly one billion sticks, from 7.07 billion to 6.1 billion; however, the illicit market share
increased by over two percentage points, from 11.8% to 13.9%, because legal consumption declined faster than illicit consumption.11 The tobacco industry, using only the market share, claimed in public debate in Poland that illicit cigarette trade was increasing12 while actually, in absolute terms, it was declining. To study the extent to which illicit market share misrepresents trends in illicit cigarette market globally, I used data from Euromonitor,13 a market research company. Although there are some concerns around the reliability of Euromonitor illicit trade data,14 no other comparable global data exist. Euromonitor provides estimates of illicit cigarette market volumes as well as total cigarette market volumes for 80 countries worldwide. I extracted 2005–2013 data for these 80 countries from the Euromonitor database and for each country identified pairs of any 2 years within that time period (36 combinations) with a pattern of declining illicit cigarette volume and rising illicit market share. I found that relying on the illicit market share measure misrepresents actual trends in illicit cigarette consumption in most of the countries. In total 43 of the 80 Euromonitor countries (54%) had a period of time, between 2005 and 2013, with an increase in illicit market share and a decline in illicit market volume (see supplementary appendix 1 for the list of those countries). Relying on illicit market share as a measure of illicit cigarette market size often gives a wrong impression about actual trends in illicit cigarette consumption. With the implementation of effective tobacco control measures, cigarette consumption is falling in most nations.15 In fact, it seems that tobacco control policies are effective in reducing consumption of legal and illegal cigarettes.16 Since tobacco control measures act predominantly to
Table 1 The tobacco industry estimates of legal and illegal cigarette consumption in Poland
A B C=A+B D=A/C
Illicit cigarette consumption (in billion) Legal cigarette consumption (in billion) Total cigarette consumption (in billion) Illicit market share 11
2009
2013
2009–2013 change (%)
7.07 52.63 59.7 11.8%
6.1 37.66 43.76 13.9%
−13.7 −28.4 −26.7 17.7
5 7
Source: KPMG. KPMG numbers might be inaccurate. Numbers in the table are presented to show a pattern rather than to report the exact number of legal and illegal cigarettes consumed.
decrease legal cigarette consumption, legal consumption declines faster than consumption of illegal cigarettes. In such cases, illicit market share will grow even with illicit cigarette consumption declining in absolute terms. Tobacco control researchers, health advocates and the media should be aware of these patterns and when reporting trends in illicit cigarette smoking should use absolute numbers of illicit cigarettes consumed rather than the illicit market share.
Key messages ▸ The tobacco industry uses a little “sleight of hand” to misrepresent trends in illicit tobacco trade to serve their narrative of an existing or looming problem. In many cases, their claims articulate a half-truth at best. ▸ The illicit market share, a measure widely used by the industry, can misrepresent actual trends in illicit cigarette consumption: while in many countries in absolute terms the illicit cigarette consumption declines, the illicit market share increases, because legal cigarette consumption declines faster than consumption of illicit cigarettes.
Michal Stoklosa Correspondence to Michal Stoklosa, Economic and Health Policy Research, American Cancer Society; [email protected] Acknowledgements The author would like to thank Jeffrey Drope and John Daniel for their valuable input and comments. Competing interests None declared. Provenance and peer review Not commissioned; externally peer reviewed. ▸ Additional material is published online only. To view please visit the journal online (http://dx.doi.org/10. 1136/tobaccocontrol-2015-052398). To cite Stoklosa M. Tob Control Published Online First: [ please include Day Month Year] doi:10.1136/ tobaccocontrol-2015-052398 Received 9 April 2015 Accepted 6 May 2015 Tob Control 2015;0:1–2. doi:10.1136/tobaccocontrol-2015-052398
Tob Control Month 2015 Vol 0 No 0
Copyright Article author (or their employer) 2015. Produced by BMJ Publishing Group Ltd under licence.
1
Downloaded from http://tobaccocontrol.bmj.com/ on October 13, 2015 - Published by group.bmj.com
Research letter REFERENCES 1
2
3
4
5
2
Smith KE, Savell E, Gilmore AB. What is known about tobacco industry efforts to influence tobacco tax? A systematic review of empirical studies. Tob Control 2013;22:144–53. Stoklosa M. Illicit trade. In: Eriksen M, Mackay J, Schluger N, et al., eds The tobacco atlas. 5th edn. Atlanta, GA: The American Cancer Society, Inc., 2015. http://www.tobaccoatlas.org/topic/ illicit-cigarette-trade/ (accessed 9 Apr 2015). Hatchard JL, Fooks GJ, Evans-Reeves KA, et al. A critical evaluation of the volume, relevance and quality of evidence submitted by the tobacco industry to oppose standardised packaging of tobacco products. BMJ Open 2014;4:e003757. Adams M, Effertz T. Tabaksteuern, Schmuggel und unversteuerte Zigaretten—Zur Glaubwürdigkeit der„ Entsorgungsstudie” der Tabakindustrie [Excise Taxes on Tobacco and the Problem of Smuggling— Concerning the Credibility of the Tobacco Industry’s “Discarded-Cigarette Packages-Study”]. Gesundheitswesen 2011;73:705–12. Stoklosa M, Ross H. Contrasting academic and tobacco industry estimates of illicit cigarette trade:
6
7
8
9
10
11
evidence from Warsaw, Poland. Tob Control 2014;23:e30–4. Chen J, McGhee SM, Townsend J, et al. Did the tobacco industry inflate estimates of illicit cigarette consumption in Asia? An empirical analysis. Tob Control Published Online First: 6 Jan 2015. doi:10.1136/tobaccocontrol-2014-051937 Gilmore AB, Rowell A, Gallus S, et al. Towards a greater understanding of the illicit tobacco trade in Europe: a review of the PMI funded “Project Star” report. Tob Control 2014;23:e51–61. van Walbeek C. Measuring changes in the illicit cigarette market using government revenue data: the example of South Africa. Tob Control 2014;23:e69–74. Rowell A, Evans-Reeves K, Gilmore A. Tobacco industry manipulation of data on and press coverage of the illicit tobacco trade in the UK. Tob Control 2014;23:e35–e43. Clarke H, Prentice D. Will plain packaging reduce cigarette consumption?. Econ Pap J Appl Econ Policy 2012;31:303–17. KPMG. Project Sun. A study of the illicit cigarette market in the European Union. 2013 Results. 2014. http://www.
12
13 14
15
16
pmi.com/eng/media_center/media_kit/documents/sun% 20report%202013.pdf (accessed 9 Apr 2015). Pracodawcy RP (members: Philip Morris Polska and British American Tobacco Polska). Szara strefa wyrobów tytoniowych w latach 2011–2014. Nowe trendy i zagrożenia. http://www.pracodawcyrp. pl/download/gfx/kpp/en/defaultaktualnosci/20/569/1/ szara_strefa_wyrobow_tytoniowych_w_latach_ 2011-2014_nowe_trendy_i_wyzwania_-_raport.pdf (accessed 29 Apr 2015). Euromonitor International. Passport database. London, UK: Euromonitor International, 2014. Blecher E, Liber A, Ross H, et al. Euromonitor data on the illicit trade in cigarettes. Tob Control 2015;24:100–1. Ng M, Freeman MK, Fleming TD, et al. Smoking prevalence and cigarette consumption in 187 countries, 1980–2012. JAMA 2014;311:183–92. Blecher E. Commentary on Joossens et al. (2010): eliminating the global illicit cigarette trade—what do we really know? Addiction 2010;105:1650–1.
Tob Control Month 2015 Vol 0 No 0
Downloaded from http://tobaccocontrol.bmj.com/ on October 13, 2015 - Published by group.bmj.com
Is the illicit cigarette market really growing? The tobacco industry's misleading math trick Michal Stoklosa Tob Control published online May 22, 2015
Updated information and services can be found at: http://tobaccocontrol.bmj.com/content/early/2015/05/22/tobaccocont rol-2015-052398
These include:
Supplementary Supplementary material can be found at: Material http://tobaccocontrol.bmj.com/content/suppl/2015/05/22/tobaccocon trol-2015-052398.DC1.html
References
This article cites 10 articles, 4 of which you can access for free at: http://tobaccocontrol.bmj.com/content/early/2015/05/22/tobaccocont rol-2015-052398#BIBL
Email alerting service
Receive free email alerts when new articles cite this article. Sign up in the box at the top right corner of the online article.
Notes
To request permissions go to: http://group.bmj.com/group/rights-licensing/permissions To order reprints go to: http://journals.bmj.com/cgi/reprintform To subscribe to BMJ go to: http://group.bmj.com/subscribe/
