We have analysed the sales to one of our customers, a major grocery retailer, over the calendar years 1995, 1996, 1997 and 1998 of hand rolling tobaccos and compared these sales with the sales of cigarette papers.

  Sales of cigarette papers should follow the sales pattern of hand rolling, but from the above figures one is declining and the sales of papers significantly increasing. We understand that these figures are following a national trend demonstrating the effect of bootlegging on this part of the market.

  Our distribution centres service the whole of the UK including Northern Ireland and we have seen the effect on our sales in various locations around the UK when bootlegging activity intensifies. We receive reports, from our local management through our salesforce contacts with retailers about the effect this is having on our own business and that of our retail customers. The most noticeable areas are those close to the channel ports, Newcastle, Glasgow and Northern Ireland.

  We do not believe that Customs & Excise even with the increased resource being mentioned will stop such activity whilst such large pricing differentials exist between the UK and the near continent.

  As a responsible trader in duty paid goods (tobacco and alcohol), we are experiencing a decline in our trade above the level of the decline in smoking. A standstill in the duties on cigarettes will not solve the problem as has been demonstrated by what happened to the hand rolling tobacco sector.

  We hope our comments are useful to the Committee in making recommendations to the Treasury on ways of solving the problems that UK based distributors and the Treasury are experiencing.

  We would be pleased to provide any additional information and explanation as required.

30 September 1999