Leading CTN retailer Rippleglen this week reported an increase in tobacco sales. Although Rippleglen's total sales were down 2.9% to £103.5m for the year to 31 July and pre-tax profits also fell 35.5% to £214,000, it said sales in the tobacco category had recovered.
In a note in results published this week at Companies House, the directors attributed the uplift to a reduction in duty-free product and product bearing lower duty rates in other countries being brought back for later consumption.
The note also suggested the fall in the value of the pound during the results period meant that it was becoming uneconomic for black market traders to go abroad and buy lower-cost product. "Their purchasing costs have risen by around 30%," it said. "Some of the biggest tobacco sales increases we have seen have come from outlets near ports, where traditionally this problem was greatest."
The trend was occurring across the country and finally represented some good news for retailers in the fight against smuggling, said Tobacco Retailers Alliance spokeswoman Katherine Graham.
Those involved in the black market were increasingly turning towards counterfeit products and cheap whites, brands made by smaller manufacturers often outside the EU that have no legitimate market in the UK, she explained. These more organised operations were easier for HMRC to target than individuals smuggling cigarettes when returning from holiday, hence the increase in legitimate retail sales.
However, she warned that the trend may only be temporary if the economy and sterling continue to recover. The display ban due to be introduced in 2011 would also drive growth of smuggling, as had been the case in the Republic of Ireland, she added.