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September, 2009
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Why the Pirates Will Always Be With Us

A recent report states that the Pakistani Taliban are turning to counterfeit cigarettes as a new income source as crackdowns on their previous cash cow du jour, opium, have taken started to take effect. This follows on the heels of a report from last year that detailed how internationally-distributed counterfeit cigarettes are a major income source of the government of North Korea.

Counterfeit cigarettes are a mammoth underground industry. While narcotics - a product much sought-after, but not legally traded - has typically been the moneymaker of choice of the underworld, it is steadily being replaced by legal tobacco in many a black market portfolio. Tobacco is, of course, widely available throughout the world. However, due to government intervention, the price for this common product has shot up astronomically. This has left a huge opportunity for organizations that a) have no problem going around the law and b) like dealing with untraceable cash. The resulting cross-section of this particular Venn diagram consists entirely of society’s most unscrupulous players. However this is exactly what was bound to happen when a relatively cheap product is singled out for taxation, often in the name of public health, but just as often used as a ploy to fill public coffers.

While many legitimate manufacturers are looking to holograms, new ink technologies, and packaging alternatives to stifle the brand pirates, this may only be a slight stumbling block. Throughout the last few years (where allowed by law), cigarette packaging has adapted all manner of bells and whistles to thwart the fly-by-night pirate operations. (These same packaging amenities are, of course, just as often used as tools of brand promotion.) And despite all the packaging pitfalls, counterfeiting has only managed to grow. The consumers who buy counterfeit cigarettes are looking for a cheap smoke that circumvents the astronomical levies put upon them. These are consumers who don’t particularly care if they have a genuine Marlboro or not - if the price is right, and it tastes at least somewhat familiar, they feel they’ve gotten their money’s worth. As long as you have a cheap product made artificially expensive, there will be those who will produce them out of site of the taxman. This is not to say the industry shouldn’t fight the pirates - the good battle should always be taken up. However, any notions that this is a readily winnable war, is a little more than wishful thinking.

- E. D.

Tobacco International - September, 2009

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