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Deficient Market May Provoke Manufacturers to Trade in Smuggled Tobacco Products

Continued Tobacco Market Deficiency May Attract Unregistered Tobacco Products, economic expert Levan Kalandadze noted.

“Ignoring this issue may generate certain problems between the state and business sectors, as well as among the business companies within the sector. The confrontation may touch exclusive rights for distributing this or that branded tobacco product.

Ignoring this issue and continued deficit in the tobacco market may generate certain difficulties in terms of unregistered tobacco sales and tobacco imports. This issue should be timely resolved.

Increased excise tax will not result in catastrophic rise in tobacco product prices. We have seen the market has not recorded considerable changes, exlcudingi Philip Morris cigarettes. Anyway, there are certain uncertainties concerning the distribution issues. This issue should be regulated by the business itself, but this factor creates a deficit of certain products.

The behavior of smokers is driven by the intention of finding a new source for replacing the deficient product. However, dishonest manufacturers are expected to offer unregistered cigarettes for domestic market needs. Therefore, smokers may give preference to unregistered tobacco. To maximally prevent and rule out this factor, the state institutions and the business sector should make focus on their interests.

To be honest, I do not expect that smuggled tobacco ratio will increase and the market structure will change in this respect. Nevertheless, exceptional cases may be recorded anyway. Therefore, the government should show reasonability and accountability to carry out due policy and prevent similar facts”, Levan Kalandadze said.