KPMG Project Stella, Report for Latvia

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Choose country from the dropdown list to customise view Country LATVIA 2.3bn 0.5bn 19.5% €61m

cigarettes consumed 0.0bn on 2017 C&C cigarettes consumed 0.0bn on 2017 of total consumption was C&C -1.6%pts on 2017 total tax revenue lost from C&C 1m on 2017

C&C continued to decline in 2018; however, at 19.5% it remains the third highest in this Two thirds of total inflows originated from neighbouring Belarus. Given the size of the The region Latgale, which borders Belarus, had the highest regional C&C share. study. inflow to Latvia and the limit of two packets per person for travellers when crossing the border, the majority of this flow is illicit. Total consumption has remained stable in 2018 suggesting that consumers are switching from non-domestic back to Latvian cigarettes.

Total consumption, 2014-18 (bn cigarettes) Manufactured cigarette C&C volumes and share of overall cigarette C&C breakdown by type, 2014-2018 (bn cigarettes) consumption, 2014-2018

30.0% 2.56 29.3% 26.7% 0.75 2.52 2.45 ) s

2.28 2.31 e 0.67 t

t 22.6% n 0.75 0.67 0.55 e 0.60 21.1% r o

0.45 i t 0.48 a 19.5% 0.55 p g 0.02 0.04 0.04 i 20.0%

0.01 c 0.03 m 0.48

u 0.45 n

s 0.53 o

i 0.40 n

l 0.75 l i 0.67 o 0.45 c b

( f 0.55 o

e 0.42 1.80 1.82 1.85 1.76 1.82 0.48 0.45 10.0% 0.34 0.31 m %

u 0.20 l o V 0.20 0.16 0.00 0.0% 0.09 0.10 0.10 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Counterfeit & Contraband (C&C) C&C as a % of consumption Counterfeit Illicit Whites Other C&C

Notes: (1) Latvian LDS total was taken from the Ministry of Finance of the Republic of Latvia Sources: KPMG EU flows model 2014-2018; travel data taken from World Travel Organisation statistics

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Key Inflows and Outflows from LATVIA, 2018 (bn cigarettes) Breakdown of Total Consumption, 2014-2018 (bn cigarettes)

Weighted average price in LATVIA: €3.20 (5.68% change from 2017) 2014 2015 2016 2017 2018 Legal Domestic Sales (LDS) 1.860 1.915 1.947 1.886 1.940 Outflows -0.063 -0.092 -0.097 -0.123 -0.119 Legal Domestic Consumption (LDC) 1.797 1.823 1.851 1.763 1.821 Non-Domestic Legal (ND(L)) 0.014 0.021 0.045 0.033 0.040 Counterfeit & Contraband (C&C) 0.749 0.671 0.552 0.481 0.451 Total Non-Domestic 0.764 0.692 0.593 0.514 0.491 Total Consumption 2.560 2.515 2.444 2.276 2.312

Total inflows by country, 2014-2018 (bn cigarettes) Finland €6.70 2014 2015 2016 2017 2018 Belarus 0.505 0.467 0.408 0.343 0.324 Estonia Origin: Russia €3.55 Duty Free Labelled 0.006 0.013 0.013 0.014 0.039 €1.53 Counterfeit 0.028 0.064 0.045 0.037 0.037 0.000 0.005 0.010 0.014 0.032 Duty Free Labelled Ukraine Belarus Russia 0.208 0.121 0.085 0.051 0.027 €0.59 Other 0.016 0.022 0.031 0.054 0.032 Total Inflows 0.764 0.692 0.593 0.514 0.491 Ukraine €0.93 Total outflows by country, 2014-2018 (bn cigarettes)

2014 2015 2016 2017 2018 © 2019 Mapbox © OpenStreetMap Estonia -0.007 -0.003 -0.015 -0.029 -0.030 Finland -0.006 -0.009 -0.004 -0.017 -0.017 Map shows major flows. Countries which are both a source and a destination are coded according to the larger flow. Sweden -0.006 -0.007 -0.012 -0.017 -0.011 Flow Colours Country Colours UK -0.010 -0.030 -0.022 -0.015 -0.008 Country label format: -0.003 -0.001 -0.008 -0.001 -0.008 Inflow to Country of Study Country of Study Source France Country Name Other -0.032 -0.041 -0.035 -0.044 -0.045 (Average price per pack) Outflow from Country of Study Destination Total Outflows -0.063 -0.092 -0.097 -0.123 -0.119

Notes: (1) Latvian LDS total was taken from the Ministry of Finance of the Republic of Latvia Sources: KPMG EU flows model 2014-2018; travel data taken from World Travel Organisation statistics Hover here to view any country-specific LATVIA adjustments

Country Type Select country and type to customise view LATVIA C&C

C&C% by region C&C by country of origin, 2014-2018 (bn cigarettes) C&C by brand, 2014-2018 (bn cigarettes)

0.75 0.75 0.008 0.028 0.005 0.67 0.67 0.017 0.064 0.204 0.002 0.55 0.367 0.55 0.005 0.118 0.045 0.275 0.000 0.003 0.48 0.48 0.005 0.45 0.45 0.083 0.037 0.197 0.037 0.034 Vidzeme 0.009 Pieriga 0.011 0.037 0.007 0.152 0.042 0.010 0.015 0.154 0.016 0.008 0.013 0.031 0.101 0.039 0.015 Riga 0.132 0.035 Kurzeme 0.027 0.505 0.034 0.465 0.171 0.407 0.151 0.131 0.107 0.341 0.322 0.142 Latgale Zemgale

0.137 0.137 0.148 0.129 0.094

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Other Ukraine OTHER NZ

Counterfeit Belarus MINSK

IWs:no country-specific label WINSTON

Country Type Select country and type to customise view LATVIA ND(L)

ND(L)% by region ND(L) by country of origin, 2014-2018 (bn cigarettes) ND(L) by brand, 2014-2018 (bn cigarettes)

0.045 0.045

0.040 0.040

0.005 0.007 0.033 0.003 0.033 0.025 0.026 0.003 0.003 0.005

0.005 0.009 Vidzeme 0.004 Pieriga 0.015 0.002 0.021 0.021 0.006 0.002 Riga 0.001 0.002 0.009 0.004 0.002 0.001 0.011 Kurzeme 0.004 0.014 0.014 0.012 0.001 0.007 0.001 0.000 0.005 0.006 0.0001 0.002 0.005 0.000 0.003 0.004 0.008 Latgale 0.008 0.002 0.008 Zemgale 0.005 0.008 0.011 0.002 0.001 0.012 0.009 0.000 0.000 0.009 0.003 0.004 0.004 0.003 0.003 0.002 0.001 0.001 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Other Duty Free Labelled OTHER MARLBORO

Estonia Russia L&M WINSTON

Belarus CHESTERFIELD

Notes: (1) Latvian LDS total was taken from the Ministry of Finance of the Republic of Latvia Sources: KPMG EU flows model 2014-2018; travel data taken from World Travel Organisation statistics