LAUSANNE, Switzerland--(BUSINESS WIRE)--Apr. 24, 2013--
The Tobacco Products Directive (TPD) could adversely affect Europe’s
economy, resulting in up to 175,000 job losses and lost tax revenue of
up to EUR 5 billion throughout Europe, according to a new study
published by Roland Berger Strategy Consultants.
The study, commissioned by Philip Morris International Inc. (PMI)
(NYSE/Euronext Paris: PM), and undertaken by Roland Berger, measures the
potential economic impact of several of the proposals under
consideration by the EU including standardizing the packaging and
labeling of cigarettes and a ban on menthol and slim cigarettes. It
concludes that these measures have the potential to reduce prices across
the whole tobacco market and to fuel the illicit trade in tobacco
products, resulting in significant job losses and reduction in tax
revenues.
“The introduction of the new Tobacco Products Directive could
significantly affect the European economy, not only the tobacco sector,” said
Patrick Mannsperger, Partner at Roland Berger Strategy Consultants. “The
tobacco sector currently generates more than EUR 100 billion in tax
revenue annually, a reduction in this revenue will require spending cuts
or tax rises in other areas, which could have an adverse effect on the
economy and a negative impact on employment in the EU.”
The report also concludes that:
-
Pack standardization is likely to influence consumer behavior,
resulting in downtrading to cheaper brands and growth in the illicit
trade;
-
The illicit trade, which already represents about 11 percent of
cigarette consumption in the EU, could grow by 25 to 55 percent under
the TPD as a result of standardized packaging and the ban on slim and
menthol cigarettes which would mean these products would only be
available on the illegal market. This translates to an increase in
annual sales of illicit cigarettes from 68 billion to 84-106 billion.
Combined these factors could lead to:
-
As many as 175,000 job losses;
-
Up to EUR 5 billion in lost tax revenue in the EU in total;
-
An increase in smoking rates by up to 2 percent as a consequence of
price competition reducing prices across all tobacco market segments.
The TPD will hit some countries particularly hard. For example, in
Poland, the TPD could cost up to 50,000 jobs and up to EUR 780 million
in lost tax revenue. Bulgaria could lose up to 29,000 jobs, while in
Greece annual tax revenue could decline by up to EUR 220 million.
The implementation of plain packaging, currently under discussion as a
potential amendment of the new TPD, has the potential to further amplify
the effects on tax revenue and jobs described above. Based on a first
estimate, combined these factors could lead to as many as 305,000 job
losses and up to EUR 8.5 billion in lost tax revenue in the EU in total.
In addition, the illicit market could increase by up to 65 percent if
the new TPD including plain packaging is introduced.
PMI’s Vice President, Communications, Julie Soderlund commented, “As
this study confirms, standardizing packaging and banning 10 percent of
the EU cigarette market, without any credible scientific evidence that
this will reduce smoking rates or improve public health, risks fueling
the black market, which already costs Member States EUR 12.5 billion
annually. We hope the EU will reconsider these proposals and replace
them with a regulatory framework that is not politically driven, but
science-based and effective in reducing the harm caused by smoking
without imposing unnecessary burdens on the economy.”
Click here to download the study free of charge: www.rolandberger.com/pressreleases
To learn more about PMI visit www.pmi.com.
About Roland Berger Strategy Consultants
Roland Berger Strategy Consultants, founded in 1967, is one of the
world's leading strategy consultancies. With 2,700 employees working in
51 offices in 36 countries worldwide, we have successful operations in
all major international markets. The strategy consultancy is an
independent partnership exclusively owned by about 250 Partners.
About Philip Morris International Inc.
Philip Morris International Inc. (PMI) is the leading international
tobacco company, with seven of the world’s top 15 international brands,
including Marlboro, the number one cigarette brand worldwide. PMI’s
products are sold in more than 180 markets. In 2012, the company held an
estimated 16.3% share of the total international cigarette market
outside of the U.S., or 28.8% excluding the People’s Republic of China
and the U.S. For more information, see www.pmi.com.
Source: Philip Morris International
Roland Berger Strategy Consultants
Press Department
Tel.:
+49 89 9230-8483
E-mail: press@rolandberger.com
www.rolandberger.com
or
Philip
Morris International
PMI Press Office
Phone: +41 (0) 58
242 4500
E-mail: media@pmi.com
www.pmi.com