PMCR launched a new campaign aimed at c1 million Germans visiting the Czech Republic to top buying counterfeited cigarettes. The campaign involves distribution of 850k leaflets in German warning against possible risks in buying illegal cigarettes in terms of product quality as Germans are sensitive to the production conditions.
Our view:
Illegal trade in cigarettes has grown following the series of excise tax increases as illegal Marlboro’s can be purchased at 30% discount. It is estimated that the market share of illegal cigarettes reaches c5-7% in the Czech Republic compared to over c20% in Slovakia. Given the fact that c25-30% of domestic cigarettes consumption is attributed to foreigners of which a large part is formed by Germans, we believe that reduction of Germans buying illegal products should stimulate PMCR’s sales.