Black market tobacco sales put stores in the red

Less than a year after the introduction of a tobacco display ban, contraband products account for more than half the cigarettes sold in Ontario, Canada, raising fears of a similar increase if the ban is introduced in the UK.

Dave Bryans, president of the Canadian Convenience Stores Association (CCSA), told Convenience Store that CCSA research revealed sales of unregulated black market tobacco had now overtaken the legitimate market. "There are now more cigarettes sold outside stores than in them and it's set to get worse," he said.

In May 2008, before the ban on tobacco display in Ontario, 30% of tobacco sales were through the black market. Last year the UK tobacco industry put the figure for the UK at 27%.

Bryans said smokers were turning to the black market because they didn't like the fact they could no longer see what they were buying. "The trust has been lost. It's much easier for them to visit a contraband seller where they can see the packs, and get them cheaper."

He added that as well as depriving the Province of duty revenue, the decline in legitimate tobacco sales was devastating independent retailers.

Just under a quarter (22.5%) of small stores in Ontario have either closed or been sold since the display ban was imposed. In Quebec, that figure is 19.9% and in Saskatchewan, the first province to impose the display ban in 2004, it is 17.3%.

"Tobacco is a vital category for independent retailers because of the footfall that it produces and the secondary spend that it encourages. Losing those extra sales is like a death blow for retailers," Bryans added.

He also said the ban was making it more difficult to recruit staff. "Staff are now under the constant threat of being penalised for an accidental underage sale. People just don't want to do the job anymore."

The bans have had no positive effect on youth smoking rates in Canada, which have remained flat at 15% since 2006.