Supply and distribution
We are totally opposed to illicit trade and are committed to working with governments and customs and excise authorities around the world to tackle tobacco smuggling and counterfeiting.
Our international experience reinforces our concern that excessive tax increases by governments fuel the growth of illicit trade.
Smuggling and counterfeiting benefits no one except the criminals involved, creating a market that is uncontrolled and unaccountable. As a result, children can more easily obtain tobacco products, governments are deprived of tax revenues and the livelihoods of independent tobacco retailers are threatened.
We apply stringent controls to our global network of distributors, and have a dedicated team of specialists who operate internationally in conjunction with governments and customs and excise authorities to disrupt the supply and sales of illicit product.
The success of our operations has helped to significantly reduce smuggling of genuine Imperial Tobacco products.
Our anti-illicit trade activity is increasingly directed against counterfeiting, which is a growing issue for a range of consumer goods' industries.
Our brands are manufactured to the highest standards and comply with all regulatory requirements. Counterfeit products do not comply with these requirements and therefore deprive smokers of the quality and taste they associate with their favourite brands.
Retailers and consumers should only buy tobacco products from legitimate sources.
Imperial Tobacco product supply policy
We rigorously implement a fully documented, robust and responsible manufacturer supply policy. We apply stringent controls to our global network of distributors and we are fully committed to working in partnership with global law enforcement agencies to counter this illicit trade.
Working in partnership with Her Majesty's Revenue & Customs (HMRC) in the UK and customs authorities around the world, we have taken significant steps to combat smuggling. The success of initiatives with HMRC has helped to reduce the volume of seizures of our cigarette brands in the UK by more than 97 per cent between 2001 and 2006.
We have never supplied any overseas market with the intention that our products would be diverted into smuggling.
It is the policy of Imperial Tobacco Group PLC to supply its products on a commercial basis to approved customers and markets in accordance with the regulatory and/or legislative requirements of the destination market. Products will only be supplied in quantities that are commensurate with domestic consumption in the markets and the permissible requirements of the travelling consumer.
Evidence of product diversion will be investigated immediately and appropriate actions taken to mitigate the risk of further diversion, including limiting overall supplies, restricting the brands supplied and/or cessation of supply.
We have a range of anti-smuggling measures for genuine products, as part of our rigorously enforced supply policy, which include:
- Ensuring product is manufactured, sold, distributed, stored and shipped in accordance with all applicable fixed and legal requirements
- Ensuring product is distributed and sold in accordance with all applicable tax and duty laws in the intended destination market
- Ensuring product carries the health warnings and other required markings of the destination market
- Carrying out stringent pre- and post-supply checks on customers and supplied volumes
- Applying pack coding systems that enable identification of destination markets, production machine numbers, date and site of manufacture and in many cases, first customer, to aid tracking of consignments with regard to seizures
- Taking action to restrict supply, if necessary de-listing, where the first customer cannot demonstrate sufficient effective control of its products to prevent the repetition of smuggling
Imperial Tobacco has been working with government authorities and international organisations to reduce the illicit trade in tobacco products for some years. Whilst our stringent supply policy has reduced the trade in genuine tobacco product, this trade has, to a large extent, been replaced by counterfeit product.
Memoranda of Understanding
MoUs are documents that formalise the protocols to facilitate effective action against illicit trade.
They enable us to: establish a framework of co-operation to counter smuggling and counterfeiting, open up dialogue and act as a conduit for the exchange of confidential information, and promote the interests of Imperial Tobacco and our customers and prevent the erosion of legitimate markets.
In March 2006 we signed a new UK Memorandum of Understanding (MoU) with the other UK tobacco manufacturers and HMRC (updating the previous Imperial Tobacco one from July 2003), formalising jointly developed protocols to combat the illicit trade in genuine and counterfeit tobacco products.
We currently have a further 15 MoU/co-operation agreements with the authorities in Ireland, Italy, Hungary, Slovak Republic, Czech Republic, Turkey, Macedonia, Kosovo, Ukraine, China, Australia, Belgium, Bulgaria, Vietnam and Morocco.
Practical measures to combat illicit trade
The key elements required to combat the illicit trade in tobacco products should contain measures to combat both the illicit trade in genuine tobacco products as well as the increasing and particularly damaging illicit trade in counterfeit tobacco products.
We believe that in order for the measures to be practical and effective, responsibility for each of the key elements should be assigned clearly to the individual parties involved, i.e.:
- Tobacco manufacturers;
- Government authorities and international organisations;
- Tobacco manufacturers and/or government authorities and international organisations working together.
Detailed below are the measures which we believe should be considered:
- Tobacco manufacturers
- Know your customer (KYC) – a robust and rigorously implemented manufacturer supply policy
- Supply chain control
- Tracking and tracing
- Information provision
- Material/machinery control
- Material suppliers co-operation
- Government authorities and international organisations
- Effective enforcement
- Increased international co-operation
- Information provision
- Appropriate excise tax policy
- Tough penalties
- Tobacco manufacturers and/or government authorities and international organisations working together
- Memoranda of understanding
- Information exchange
- Tracking and tracing
- Consumer awareness
- Product identification
- Co-operation in counterfeit control
This can be summarised in the following diagram:
Combating Illicit Trade – Shared Responsibility
Imperial Tobacco's policy is to ensure that the Group and its subsidiaries do not employ children.
We are committed to working with our suppliers to encourage their compliance with international standards on child labour. We work with relevant stakeholders to eliminate the exploitation of children in the tobacco sector.
Imperial Tobacco is a Board member of the Eliminating Child Labour in Tobacco Foundation (www.eclt.org). This is a partnership established by organisations representing tobacco workers, growers, suppliers and manufacturers, supported by the International Labour Organization (ILO), which aims to improve access to education and ensure alternatives to childhood working. The ECLT Foundation aims to ensure that children are provided with an upbringing that gives them the best chance to succeed in all aspects of life.
Further information is available in the Corporate Responsibility section of the website.
We support penalties for retailers who sell tobacco products to children and for criminals who trade in smuggled or counterfeit products.
We do not believe that the introduction of retailer licensing will prevent illegal sales. Combating illegal sales is already being addressed through the co-operation of the tobacco industry and national authorities, without unnecessarily bureaucratic and costly retailer licensing.
Retailer licensing does little to reduce youth smoking or illicit trade. Counterfeit and smuggled products are rarely sold through the legitimate distribution chain.
We do not seek to use genetically modified tobacco, as we do not believe that our consumers wish to purchase products that may contain genetically modified materials.
We take steps to ensure we do not purchase or use genetically modified tobacco. These steps include regular testing.
We actively encourage the minimisation of the use of plant protection products (PPPs).
The majority of the tobacco that we use is purchased through the leading international leaf supplying companies. Working together with our suppliers on a range of initiatives, including agricultural best practice, we actively encourage the minimisation of the use of PPPs.
Samples of the tobacco that we purchase are tested regularly for residues of PPPs in order to ensure that our tobacco blends meet our responsibility standards.
Imperial Tobacco has adopted the Social Responsibility in Tobacco Production (SRiTP) programme in order to monitor and continuously improve the activities of our suppliers, and to ensure that they meet our responsibility standards. Further details of this programme are in the Corporate Responsibility section of this website.