Tracing back the source of illegal tobacco
Illegal tobacco trade is the production, import, export, purchase, sale or possession of goods that fail to comply with the law
Contraband cigarettes
Contraband cigarettes are our number one priority in the fight against illegal trade
They’re legitimate products that have been diverted from the supply chain by smugglers, which are then sold at a cheap price in countries where duties are higher.
It’s the type of illegal trade that can most heavily impact our business and reputation, but it’s also the type that we’re able to help fight most effectively.
We’re proud of the role we’ve played in reducing the spread of contraband cigarettes
This is the type of illegal trade that has gone down the most thanks to our cooperation agreements with authorities, and our efficient Track & Trace solutions, as well as the information we share with police and customs.
Since 2009, seizures of JTI-manufactured tobacco have dropped by more than 50%.
We’ve taken several steps to achieve this. Our production amounts never exceed the legitimate market demand and the security of our supply chain and our customers has never been more tightly controlled thanks to the implementation of Track & Trace and similar initiatives.
Illicit whites (also known as cheap whites)
Interpol, the world’s largest police organization, defines illicit whites as “New cigarette brands produced legally in one jurisdiction but produced intentionally for smuggling into other countries where there is no prior legal market for them.”
We only make our products in quantities that meet the legitimate market demand – we never exceed that amount. Illicit whites are cigarettes purposely produced for illegal sales and personal profit by small manufacturers, many of whom are linked to organized crime groups.
Why are criminals involved in the illegal tobacco trade increasingly turning to illicit whites?
While the battle is far from won, there has been significant progress in the fight against illegal tobacco in recent years. In 2013, the European Commission acknowledged that, “the relative share of smuggling of [the four main global tobacco companies, including JTI] has decreased.” Seizures of illegally diverted JTI products have decreased by more than 50% since 2009.
What this means is that as it becomes harder to smuggle our genuine, legitimate products, criminals are looking to counterfeit or illicit whites as an alternative.
A complex problem with clear consequences
It’s not always easy to determine where exactly in the supply chain illicit whites (or ‘cheap’ whites) become illegal – they’re commonly produced in former Eastern Bloc states, the Middle East and Asia, and are smuggled to and sold in high tax European markets at a low cost. These small manufacturers are not bound by the memoranda of understanding with governments that we (and other large scale legitimate producers) actively lobby for and voluntarily sign.
Even if illicit whites can be legal at their point of manufacture, the impact they have once they’re in criminal hands is just as damaging as any other form of illegal trade. The profits from illicit whites are used no differently to those from other forms of illegal trade: they prop up harmful criminal activities that include money laundering, bribery, corruption and criminal tax evasion – all of which fund organized crime and even terrorism.
A goat in camel's clothing
The ingenuity, effort and technological sophistication of criminals to get illicit tobacco products into the global supply chain cannot be underestimated…
The rise of ‘illicit whites’ or ‘cheap whites’, which are currently swamping markets all over the world, is a particularly disturbing new development in the world of illegal tobacco. Cheap whites are products manufactured legally in their own country, for the sole purpose of illegal smuggling across borders.
One particular brand that has gained notoriety in recent times is ‘Jin Ling’, manufactured in Kalingrad and other production sites in Moldova and the Ukraine.
While Jin Ling has been seized in many European countries, it has been particularly successful in Germany where it is now allegedly a top-ten brand by volume of sales.
Of particular concern to JTI is the fact that Jin Ling’s pack design resembles our very own Camel, although it features a goat rather than our iconic dromedary.
The Jin Ling problem in numbers
Jin Ling has been denoted as the first international illicit brand made to be smuggled and manufactured to order.
24
bn
number of cigarettes produced in just one of Jin Ling’s three factories each year
$
0.20
price that smugglers pay per pack, bought directly from the factory
$
1
M+
profit that smugglers are estimated to make on each small container of Jin Ling cigarettes. Larger containers can reap a profit of $3 million for the criminals
Fighting Jin Ling together
One of the most effective ways of fighting illicit whites such as Jin Ling, are programs like 'Know your Customer’ (KYC). All major international tobacco manufacturers have this process in place to verify the identity of their clients, secure their supply chain and prevent customers with potentially illegal intentions from diverting the products from their legal routes.
We’ve called on governments to extend rigid ‘Know Your Customer’ (KYC) programs – especially to small and medium-sized tobacco manufacturers who are often the source of cheap whites.
Counterfeit cigarettes
Fake in every way
Counterfeits are designed to cheat consumers: fake packaging and fake branding on fake products. Like all illegal cigarettes, they’re also smuggled past domestic duties meaning they don’t just harm legitimate businesses, they harm taxpayers.
Dangerous for consumers, damaging to brands
Counterfeits violate the intellectual property rights that are key to a brand. Not only are they manufactured without authorization from the rights owners – they’re manufactured without being held to account by the numerous product quality and safety standards that govern our industry.
That means consumers buy counterfeits expecting a certain level of quality – the truth is they’re inferior in every way. Our forensics team uses state of the art methods to assist law enforcement in analyzing seized counterfeits. The results are never pretty and far-removed from the ingredients found in genuine products. Past tests have found rat droppings, dust, dirt, metal filings, high levels of lead and cadmium all present in counterfeit cigarettes.
