Contraband cigarettes stage comeback

Tobacco smuggling is back in vogue. Shipments from China have replaced the speedboats that once supplied Europe with bootleg American brands. And now the cigarettes inside the fake packets of makes such as Marlboro, Winston or Chesterfield are adulterated by coarse, low-grade tobacco.

"We have seen a major increase in smuggling over the last year," said a spokesperson from the Union of Spanish Tobacconists (UAEE.) The shift has coincided with an 11-percent drop in cigarette sales between 2009 and 2010. The tobacco enters via the northwest coastal region of Galicia, where smuggling cigarettes is a "time-honored tradition," according to the Spanish Treasury.

The port of Vigo is ranked as one of those with the highest volume of smuggling traffic, alongside Algeciras in the south and Valencia to the east. This figure is calculated by the numbers of seizures, which have increased steadily over the last three years.

Last year, customs intercepted a total of 12.5 million packets off boats from Asia, at the three most notorious smugglers' ports. The consignments came hidden inside shipments of glass, porcelain and textiles. Around 90 percent of the contraband came from China, and the packets were imitations of leading American brands and came classified as being in transit within the European Union.

Customs officials use state-of-the-art scanners that allow them to see the contents of a container without opening it up. But the smugglers work to smooth their merchandise's safe passage. Ten police personnel and five port staff were arrested in connection with an upsurge in illicit traffic at Vigo, although the case against them had to be dropped due to a lack of evidence.

Over a million packets of cigarettes made up one of the largest hauls seized in Vigo in January last year. The imitation Marlboros were worth over 3 million euros. Analysis carried out by quality control at Marlboro revealed the contents to be a crude imitation of the original brand.

As a rule, the cigarettes are destined for other European countries, mostly the United Kingdom where a heavily taxed packet of 20 Marlboros costs smokers over 7 euros. This compares to a price of 4.40 euros in Spain, the destination country for only one of the major consignments intercepted by customs in Vigo. They believe it was destined for sale in Galicia. The imitation brand cigarettes are sold at an average of 60 cents less than originals from all sorts of improvised retail outlets, including people's homes.

The hike in smuggling will remind tobacconists of the harsh climate of the 1990s, when an economic crisis converged with blossoming networks of organized crime. The Tax Office estimates that contraband accounted for 14 percent of sales between 1995 and 1997. Customs broke up two major rackets at the end of the 1990s and in 2001 brought down the last bastion, Popular Party mayor José Ramón Barral from Ribadumia, Galicia, who had amassed a personal fortune.

"It isn't as bad as the 1990s," says the UAEE. Two years ago smuggling was at a residual level, accounting for less than 0.5 percent of sales. But this has changed drastically, officials warn. The key port locations correspond to the places that have experienced the sharpest drops in cigarette sales. Galicia, and coastal regions in the east and south, have registered drops in sales of 15 and 25 percent, according to the Tobacco Business Association AET, which represents manufacturers and importers.

Last year the tobacco industry sold 3.6 million fewer packets than in 2010. But the Treasury indicated that profits were not adversely affected. In fact, income went up by nearly three percent in 2009.

A bigger headache for tobacco firms may be the smoking ban, which came into force on January 2. Government figures showed cigarette sales had dropped by a third in January compared to December figures.