Ecuador: Eight in ten cigarettes consumed are illegal

RIO DE JANEIRO, BRAZIL – In Ecuador, eight out of every ten cigarettes come from contraband. That is the conclusion reached by the research of the consulting firm Invamer, hired by the tobacco industry, which also showed that the largest amount of illegal products come from Asia.

“In rural and urban areas of the Ecuadorian Sierra, Coast, and Amazon, it was found that the national figure of illicit cigarette trade reached 80%. In 2020 the incidence was 79%,” the report states. What does it mean that this rate is so high? Eight out of every ten cigarettes, besides being illegal, “do not pay taxes and destroy formal employment”.

WHERE ILLEGAL CIGARETTES ARE CONSUMED THE MOST

The analysis also highlights that Guayas, Santo Domingo de los Tsáchilas, Carchi, Santa Elena, Esmeraldas and Los Ríos are the provinces with the highest incidence. This is shown in the data for some areas:

• Esmeraldas: 100%
• Los Ríos: 97%
• Carchi: 91%
• Guayas: 90%
• Santa Elena: 90%
• Santo Domingo de los Tsáchilas: 90%
• Manabí: 88%
• El Oro: 83%
• Cañar: 80%

RAPID GROWTH

But what is most alarming is the growth that has existed over the years, since in 2015, the illegal market represented 19%, in 2016 it was 42%, in 2017 53%, in 2018 it reached 71%, to finally stand at 79% in 2020 and 80% in 2021.

“Undoubtedly, thanks to the methodology used, the study we have been conducting since 2020 has the widest scope available in the country. Both urban and rural areas have been considered, and it is important to do so since studies focused only on urban areas would be ignoring a third of the population,” says Martin Orozco Pfeifer, general manager of Invamer.

WHERE AND WHY THEY ARE SOLD

Where are these products sold? According to the study, 72% of the products are sold in neighborhood stores, followed by street vendors with 12%. Then come liquor stores, with 7%, and supermarkets, 4%.

When asked about the reasons for purchase, 81% of those surveyed indicated that price is one of the determining factors in their decision. However, the main factor is taste, with 82%. Availability is also a factor, with 51%.

MOST COME FROM ASIA

The Invamer study found that 82.6% of the total illegal cigarette market comes from Asia, with China having the highest figure (40%). This country is followed by Paraguay (8%) and Colombia (9.4%).

The most widely marketed brand is Carnival, with a 30% share of the total market and a price of US$2.19. Silver Elephant, also of Chinese origin, also has 26.2% and a price of US$1.97, while the average price of a legal pack is US$5.98. “This would represent a disadvantage of almost 3 to 1 against the formal industry, where the price difference is due to tax evasion,” the report notes.

The average daily consumption per unit of legal cigarettes is 5.11 versus 6.53 for illegal cigarettes. In other words, “it could be concluded that those who consume this type of product, of illegal origin, tend to do so to a greater extent than those who consume legal products”.

For this study, 1,024 surveys were conducted among men and women between 19 and 64 years of age. The results have a ± 3.06% margin of error, with 95% confidence for the total column.

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