Tobacco rules could close hundreds of small retailers

Custom officer Matthew Hudson with 38 million cigarettes with a retail value of EUR*14.7m seized by customs officers in Dublin Port last year. New proposed regulations by the EU are likely to grow the black market in cigarettes even further

The EU has introduced a raft of new tobacco proposals which could have serious consequences for legitimate retailers

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A consultation paper by the Department of Health is proposing new regulations that if implemented will see hundreds of retailers close their doors as many tobacco SKUs become exclusively available from contraband sources.

Currently the amount of non-duty paid tobacco consumed in Ireland is worth about €6 billion annually. 24% of tobacco products consumed in 2011 contributed nothing to the exchequer. These tobacco products are a combination of counterfeit cigarettes, illicit whites and contraband.

The latest proposals, which originate from the EU, will drive the entire roll your own category, and many other tobacco products out of legitimate retail outlets and into the hands of criminals and subversives.

The EU proposals state that it shall be an offence to sell menthol cigarettes of any description; that slim cigarettes e.g. Silk Cut Slims and Vogue would be banned, that a minimum pack weight of 40g is proposed for roll your own tobaccos which will bring the minimum spend by a consumer on this product to more than €15.

There are also packaging changes proposed such as an increase in the size of the combined text and pictorial health warning on the front and back of cigarette packs to 75% (from currently 45% on the back and 32% on the front) with an additional general health warning and information message to be introduced which will occupy 50% of each lateral side of the packet and a standardisation of pack dimensions for all cigarette packages and all roll your own packages. 

Retailers across the country are incensed at way the consultation process has been handled and at the proposed changes to the regulations. A number of prominent retailers felt that there was insufficient effort to disseminate the Department information and that many retailers only heard about the process with days to go to the closing date of 16 January. 

Opposition to the changes by retail groups has been very strong. As we go to press, hundreds of submissions containing the following are being sent to the Department: "In the current economic environment, the retail sector has been one of the sectors of the economy worst hit by the reduction in domestic spending power. After five years of extremely difficult trading conditions, the retail industry needs to be supported in creating additional employment, not further damaged with ineffective regulation. The introduction of the above mentioned measures will further drive legitimate consumers towards the black market and continue the downward trend of profits and employment in the retail sector."

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