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Fighting the black market

A united response to a global problem

Fighting the black market in tobacco addresses a threat to our business, while also helping to fight organised crime and preventing smokers from getting access to unregulated tobacco products.

 

  The world of the criminal black market Our world
Harm reduction No contribution to harm reduction. Harm reduction is core to our business strategy and we invest £150 million each year in research and development.
Youth smoking Active marketing and selling of tobacco products to children. Responsible marketing aimed only at existing adult smokers and a global approach to youth smoking prevention.
Product quality Poor quality products with no regulation or standards, but potentially higher health risks than legal cigarettes. Products highly regulated and we have strict quality and safety standards.
Tax Large-scale tax evasion. We pay nearly £30 billion to governments globally each year in excise and other taxes.
Exploitation Poor working standards, financial security and negotiating powers for farmers and workers throughout the supply chain. Fair treatment of farmers, suppliers and employees. We also provide direct agronomy support to over 90,000 farmers worldwide.

Keeping our own house in order

We require our companies and employees to support only legitimate trade in our products. Through our ‘Know Your Customer’ guidelines and procedures, we try to ensure that the volume of tobacco products we supply is consistent with legitimate demand. It is our policy to stop doing business with customers or suppliers that we find to be complicit in illicit trade.

Our approach to fighting the black market in tobacco includes:

  • Effective internal governance and supply chain security;
  • Gathering commercial information on the illegal trade;
  • Working with authorities to ensure that appropriate enforcement action is taken;
  • Engaging with international bodies like the World Customs Organisation to increase understanding of the issue;
  • Informing regulators about the impacts of the illegal tobacco trade; and
  • Raising awareness of the issue among our employees, business partners and the public.

We're serious about supply chain security

Working alongside other international tobacco companies, we developed industry-wide security systems that enhance our supply chain controls by allowing authentication and traceability of our products.

Digital coding technology helps governments ensure that all taxes and duties are paid on our products, while sophisticated identifiers on packs allow consumers and authorities to validate a product’s authenticity.

We are founding members of the Digital Coding and Tracking Association (DCTA), who we are working with to promote the concept of digital tax verification based on an agreed industry-wide approach.

Track and trace (T&T) technology allows us to track the forward movement of our products through our supply chain. If a product is seized by customs or enquired about by the authorities, we can trace it backwards and determine the point at which the product may have left the legitimate supply chain.

The successful implementation of T&T technology means that we can comply with a Co-operation Agreement (EUCA) to fight illicit trade that the Group signed with the European Union in July 2010.

In line with the EUCA schedule, T&T implementation has been completed in 11 end markets: Belarus, Ukraine, Poland, UK, Belgium, Luxemburg, Germany, Greece, Romania, Global Travel Retail and Slovenia, and in eight factories: Saratov (export volumes), St Petersburg (export volumes), Augustow, Prilucky, Bayreuth, Ploiesti, Pecs and Groningen. We have a well-structured plan in place to deploy the system further, with the support and co-operation of our logistics suppliers.

Our Anti Illicit Trade Intelligence Unit works hand-in-hand with law enforcement agencies worldwide to gather and share intelligence, monitor the destruction of seized products and machinery and analyse suspect fakes in our laboratories.

You can read more about how we enhance supply chain security in our brochure:

Enhancing supply chain security and fighting the illicit trade in tobacco products (3.3 mb)

International cooperation

We continue to engage with other sectors addressing illegitimate trade through international organisations such as the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy, the International Tax and Investment Centre and the Anti-Counterfeiting Group.

In 2010, we signed a cooperation agreement with the European Commission and its member states. A 2011 review of our progress showed that we are meeting all our obligations, including implementing track and trace technology, introducing enhanced ‘Know Your Customer’ policies and monitoring seizures of our brands. To support the agreement, we will provide €134 million (US$200 million) over 20 years, which can be used to fund areas including training for border staff in new security systems.

In the EU and around the world, we also support law enforcement agencies by providing training and intelligence, helping to authenticate seized products and carrying out forensic analyses on illegal goods.

The general public is often unaware of the wider impacts of the illegal cigarette trade, so we also work to raise awareness and remind people that illegal tobacco is not a victimless crime, such as through our short film on the issue: ‘This is The Man’.

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