Towards a greater understanding of the illicit tobacco trade in Europe: a review of the PMI funded ‘Project Star’ report

Abstract

BackgroundFollowing a legal agreement with the European Union (EU), Philip Morris International (PMI) commissions a yearly report (‘Project Star’, PS) on the European illicit cigarette trade from KPMG, the global accountancy firm.MethodsReview of PS 2010 report. Comparison with data from independent sources including a 2010 pan-European survey (N=18 056).FindingsWithin PS, data covering all 27 EU countries are entered into a model. While the model itself seems appropriate, concerns are identified with the methodologies underlying the data inputs and thus their quality: there is little transparency over methodologies; interview data underestimate legal non-domestic product partly by failing to account for legal cross-border sales; illicit cigarette estimates rely on tobacco industry empty pack surveys which may overestimate illicit; and there is an over-reliance on data supplied by PMI with inadequate external validation. Thus, PMI sales data are validated using PMI smoking prevalence estimates, yet PMI is unable to provide sales (shipment) data for the Greek islands and its prevalence estimates differ grossly from independent data. Consequently, comparisons with independent data suggest PS will tend to overestimate illicit cigarette levels particularly where cross-border shopping is frequent (Austria, Finland, France) and in Western compared with Eastern European countries. The model also provides data on the nature of the illicit cigarette market independent of seizure data suggesting that almost a quarter of the illicit cigarette market in 2010 comprised PMI's own brands compared with just 5% counterfeited PMI brands; a finding hidden in PMI's public representation of the data.ConclusionsPS overestimates illicit cigarette levels in some European countries and suggests PMI's supply chain control is inadequate. Its publication serves the interests of PMI over those of the EU and its member states. PS requires greater transparency, external scrutiny and use of independent data.

Tobacco industry manipulation of data on and press coverage of the illicit tobacco trade in the UK

“…Only four of the press stories could be linked to published industry data, JTI's The Billion Pound Drop report,24 which provides no methodological details. While PMI's Project Star reports are the only industry source that provides some methodological information, its limitations have previously been outlined 20. These methodological details show that the 2012 Project Star data cannot be directly compared with the 2011 data as a methodological change, from a pack-based to a cigarette-based measure, instigated in 2012 will provide an artificially higher estimate compared with previous years 62.…”

“…For HMRC, we took the midpoint illicit cigarette market share estimate and added the cross-border sales estimate. For PPACTE, we took data on cigarettes only and combined data on illicit and non-domestic legal cigarettes as a proportion of total consumption using previous calculations 20. The PPACTE data cover England and not the UK.…”

Early evidence about the predicted unintended consequences of standardised packaging of tobacco products in Australia: a cross-sectional study of the place of purchase, regular brands and use of illicit tobacco

“…Sample sizes were too small to allow robust estimations of amounts of such cigarettes purchased; however, the small number of smokers in 2013 reporting having purchased any cigarettes likely to be contraband suggests that the overall consumption of such cigarettes would be substantially lower than the amounts estimated on the basis of the discarded pack study conducted for tobacco companies and reported in the KPMG LLP study 30. Discarded pack studies49–51 have been criticised for being unrepresentative and using non-random sampling 33 34 52. Smokers who discard packs in public places may differ systematically from those who dispose of packs in domestic rubbish or at work: for instance, they may be more likely to be tourists or other visitors to the country, who in turn may be more likely than the overall population of smokers to use and discard foreign-made cigarettes, including cigarettes purchased overseas and legitimately brought into Australia 31.…”

“…Empty Pack Studies are problematic in that they tend to over-represent the cigarette packs that end up in litter in public places compared with those disposed of in domestic and work-based rubbish disposal systems 32–34. Such studies also cannot distinguish between foreign packs that are illegally smuggled into Australia and those brought in by residents and visitors who have purchased them overseas and brought them in either under personal import limits or with the required duty having been paid 33. The assumptions used by KPMG LLP to estimate the non-legitimate compared with the legitimate imports have been heavily criticised 32 33.…”

Standardized packaging and illicit tobacco use: A systematic review

“…20 , for which no methodology is available but which are likely to involve the collection of discarded cigarette packets and determining whether they were bought legally or illegally. These surveys have a number of limitations, most notably that they can only measure non-domestic products, which includes legal and illegal products and it is therefore not possible to distinguish between legal (legal cross-border and duty-free shopping and products brought in by tourists) and illegal nondomestic products.…”