UK tobacco market summary

Expenditure & revenue

• Consumer spending on tobacco products in 2009 amounted to an estimated £13.4 billion, around 90% of this on cigarettes.
• Tax revenue from tobacco in 2009/10 amounted to an estimated £10.5 billion – £8.8 billion in excise duty plus £1.7 billion in VAT.
• The total tax burden (excise duty plus VAT) accounts for 90% of the price of the cheapest cigarettes on sale in the UK.

Smuggling & crossborder shopping

• Owing to the high level of tobacco taxation the UK experiences a high level of smuggling and crossborder shopping in tobacco products – referred to as non-UK duty paid (NUKDP) consumption. TMA estimate that in 2009 around 21% of cigarette and 58% of handrolling tobacco consumption was NUKDP.
• We believe that the majority of NUKDP consumption comes from other EU Member States where taxes, and therefore prices, in many countries are much lower. For example, a typical pack of 20 cigarettes costs £6.29 in the UK and around £2.80 in Spain.
• Results from industry ‘pack swaps’ and pack collections show that the level of NUKDP has fallen in 2009. We believe that this reduction is largely due to the impact of the recession (fall in travel / weak Pound) on crossborder shopping. Whilst these ‘temporary factors’ have reduced crossborder shopping the illicit market appears to have been largely unaffected, with pack collections reporting a significant increase (40%+) in counterfeit in 2009.
• Genuine UK brands accounted for only 7% of all the large-scale seizures made by HMRC in 2008/09, with 49 per cent being counterfeit and ‘Cheap Whites’ accounting for 44%.
• HM Revenue & Customs estimate that in 2007/8 NUKDP consumption lost them revenue of between £2.3 and £4.0 billion.

Smoking prevalence

• The latest figures (2008) from the Government’s General Lifestyle Survey show that 21% of the adult population (16+) in Great Britain were cigarette/handrolling tobacco smokers – although the report does note that this is likely to be an understatement. This equates to around 10.3 million smokers – 8.8 million in England. Northern Ireland’s Continuous Household Survey shows that 23% of adults (16+) were cigarette/handrolling tobacco smokers – around 330,000 people.

Employment

• TMA member companies directly employ over 5000 people in the UK.
• A 2004 study by DTZ Pieda estimated a further 80,000 jobs among suppliers and in wholesale, distribution and retailing were dependent on the UK tobacco industry.