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How Contraband Cigarettes Came To Flourish In The Heart Of Europe

For years, the German government has steadily raised the price of cigarettes. But rather than rake in revenue, the tax policy has sparked a spike in cigarette smuggling. Jin Lings, snuck in from Russia, Moldavia and the Ukraine, are particularly popular.

Article illustrative image Partner logo A man smoking in Berlin (Onnola)

BERLIN -- One of the competitors of the global cigarette giant Imperial Tobacco is hanging out near a discount mart on Landsberger Allee. His clothing is torn. He’s small and wiry; his eyes are mistrustful. He holds a plastic bag. “There’s one of our friends, right there,” says Bernd, spotting the Vietnamese man through the car window. As he gets out of the car and heads towards him, the man hurriedly moves away and disappears around the corner, mobile phone clamped to his ear. “Now the other guys know we‘re here,” Bernd says, lighting a cigarette.

Bernd’s describes himself as a bull. Bernd isn‘t his real name. And he’s not a cop. At least not any more. He used to work for the German Federal Criminal Police. There, he learned his self-confident walk and his way of staring right through a person. He also picked up a lot of knowledge about organized crime. For this reason, Reemtsma, the German subsidiary of Imperial Tobacco, the fourth largest tobacco company in the world, was happy to hire him as head of security. Like every multinational cigarette maker, Reemtsma needs all the help it can get to keep its biggest competitors in check – and its biggest competitor isn’t the Marlboro man. It’s the black market man on the street corner.

In 2010, 22 billion untaxed cigarettes were smoked in Germany, according to the Deutscher Zigarettenverband (DZV), a German tobacco lobby. Nobody doubts the number, and because of it, the state lost more than 4 billion euros in tax revenue last year, and profits for companies like Reemtsma and Philip Morris (which owns Marlboro) were heavily impacted.

Vietnamese-run racket

Since the fall of the Berlin Wall, Vietnamese have been the main sellers of contraband smokes, as it's become an established form of criminality. Much like forced prostitution and drug dealing, this racket is extremely difficult to crush, despite the best efforts of customs officials and the millions invested by the tobacco industry.

According to DZV estimates, taxes on more than 40% of all cigarettes smoked in Berlin are unpaid. That figure rises to 60% near the border with Poland. In Bavaria, nearly every third cigarette is smuggled, while in northern Germany it’s more than one in 10. Customs agents say those estimates are conservative.

Bernd, the former police officer, has organized a little tour of Berlin for Ole Peschl, Reemtsma’s Berlin sales manager, so he can check out the company’s toughest competition for himself. One of Peschl’s customers has a tobacco store on Anton Saefkow Platz in the Lichtenberg quarter. “Do you want to see where they stash their supplies?” the woman behind the counter asks. She waves her hand in the direction of a supermarket. “Behind their sign. I see the sellers reaching behind it all day long.”Asked if she‘d called the police, she replied: “And what, make my life even more complicated?”

In front of the market stands a Vietnamese man, plastic bag in hand. He has only five cartons in the bag -- not enough to count if the police take him in. Sellers keep what they have on them at any one time under the limit, and find a place nearby to stash supplies. Bernd goes up to the man, who gives him a suspicious look: he’s apparently been kept in the loop by the guy who was phoning from Landsberger Allee. But by this time, the sellers seem to have decided that the small Reemtsma group didn’t represent a threat. “What have you got,” Bernd asks. The man reaches into the bag and takes out a carton of Jin Lings. “Good cigarettes,” he says.

Bernd buys a pack for 2.20 euros. He takes a cigarette out, crumbles the tobacco up between his fingers and examines it. “The white stuff, that’s not tobacco,” he says. “But at least there aren’t any shredded CDs or mouse droppings.” He looks at the package: it hasn’t been put together straight, and in lousy English claims that Jin Ling is produced under license from Philip Morris – which of course is not true. These are fakes of a brand that itself has not been approved for sale in Germany.

And yet,  Jin Ling is now the most smoked cigarette in Germany. The box is reminiscent of the old Camel package, except that instead of a camel there’s a ram. Jin Lings are made in three factories -- in Kaliningrad (Russia), Moldavia, and the Ukraine. In Russia, however, hardly anyone has ever heard of them: they are mainly made to be smuggled into Western Europe. It’s said that the factory price for a carton of 10 packs is 2 euros. Here, the seller is asking 22 euros – a profit margin of 1,100% less the cost of smuggling. “More lucrative than hashish,” Bernd says.

So it’s no wonder that for that kind of money, smuggling is big business. According to customs officials, the way the business is organized is that Eastern Europeans manufacture, purchase and smuggle the merchandise. In Germany, Vietnamese gangs take over. Sales areas are divided up among gang members -- and they no longer sell fake Marlboros the way they did 15 years ago. Instead, they hawk Jin Lings, Classics, or packs with Cyrillic writing on them. That way, nobody gets nabbed for trademark violation.

The Vietnamese street hawkers aren’t getting rich. Police and customs officials are assuming that most of them have been trafficked, and that they’re paying down what they owe for their passage to Europe. In some places, like the Eastgate mall, there are three of them in a row, barely 100 meters apart.

Bernd goes up to another man and asks what he has in his bag. Jin Lings, of course, and another brand called Classic. “Don’t you have some of these,” Bernd asks, pointing to the pack the man has in his shirt pocket. “No, no, mine,” says the Vietnamese, laughing. It’s a legal pack of John Player Specials. 

Read the original article in German

Photo - Onnola

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About this article source Website: http://www.welt.de/

Die Welt (“The World”) is a German daily founded in Hamburg in 1946, and currently owned by the Axel Springer AG company, Europe's largest publishing house. Now based in Berlin, Die Welt is sold in more than 130 countries. A Sunday edition called Welt am Sonntag has been published since 1948.

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