Smokers, the market and regulation
According to the “Special Eurobarometer 506“, a survey commissioned by the European Commission, 24.7% of Europe’s adult population (18+) smoke - this is around one quarter of the population, or over 90 million adults.
The question of whether this is good or bad is not the issue here; instead the discussion addresses the fact that there are 90 million consumers with a demand for tobacco products, and how to deal with this situation in the reality of everyday life.
The ban on the legal supply of sought-after products in the 20th century was a disastrous experience with the introduction of alcohol prohibition in Norway and the United States: in both cases, a huge illegal market quickly emerged to meet the persistent demand – in the absence of legal supplies.
Even today, in the light of the current regulatory situation and the prevailing prices for tobacco products, there is already a vast illegal market: in 2019, around 40 billion illicit, i.e. smuggled and illegally produced cigarettes were consumed in Europe. The retail value of 40 billion legal cigarettes is about 14 billion euro. According to the European Anti-Fraud Office OLAF, tobacco smuggling undermines anti-smoking health campaigns and has created incentives for large-scale organized crime.
Not only the shift of consumers to illegal sources demonstrates the power of demand: once tobacco products were priced out of the budget of certain consumer groups, we saw the explosive rise of e-cigarettes with liquids; and when regulators started to make these even more expensive through excise duties, the trend moved on to e-sheeshas of Chinese origin, for example.
Coming back to the initial question of how to deal with the fact that there are 90 million consumers in the European Union with a demand for tobacco products, we believe that the legal distribution chain for tobacco products plays an important role in this connection:
- The wholesale of tobacco products in the EU is open and part of the economy; in addition to excise duties on tobacco our industry is a source for all other types of taxes and for qualified jobs.
- We implement and enforce regulation in the market: the protection of minors (persons under 18) was introduced by law – it is put into practice and executed by us. The Track & Trace of tobacco products was also introduced by law – a process that is pursued by the wholesale companies.
The legal distribution chain for tobacco products is a business level that satisfies fiscal interests and meets health policy objectives. It is the only level that is transparent and can be controlled and influenced by regulation.
What happens when markets and demand are left to illegal mechanisms is written in the history books in the case of alcohol prohibition, and with regard to drugs policy it can be drawn from the “War on Drugs” declared by U.S. President Richard Nixon in 1972. This policy was so unsuccessful that a rethinking process is called for. In the words of Kofi Annan:
But despite this clear evidence of failure, there is a damaging reluctance worldwide to consider a fresh approach. The Global Commission on Drug Policy is determined to help break this century-old taboo. Building on the work of the Latin American Commission on Drugs and Democracy, our first report — The War on Drugs — demonstrated how repressive approaches to containing drugs have failed.
 European Commission, Special Eurobarometer 506, Attitudes of Europeans towards Tobacco and Electronic Cigarettes, February 2021
 KPMG, Illicit Cigarette Consumption in the EU, UK, Norway and Switzerland, 2019 results 18. Juni 2020
 https://ec.europa.eu/anti-fraud/investigations/investigations-related-eu-revenue/tobacco-smuggling_de, retrieved on 21.04.2022
 https://www.kofiannanfoundation.org/in-the-news/kofi-annan-stop-war-on-drugs/ retrieved on 21.04.2022