Distributor of cigarettes Carreras Limited is welcoming the recent influx of players on the local market with hopes that this might mop up the demand for illegally imported cigarettes.

Already burnt by illegal imports, Carreras is now fighting for market share with at least three new entrants, as well as innovations by Marlboro Cigarettes. But managing director of the company, Marcus Steele, says this may plug the demand for cheaper cigarettes which has not only been costing the company, but has also accounted for the country losing $2 billion in revenue annually.

“The legal market is selling less. If the competition is coming to help fight the illegal market then there is space. So to the extent that they can mop that up and convert that market to the legal brand, then it will increase the legal share of the market and we will be able to pick up more revenues,” Steele told the Jamaica Observer in an interview on Wednesday.

The company called a press briefing at its Ripon Road office in New Kingston where Assistant Commissioner of Police Clifford Chambers disclosed that criminals have been dealing in the trade of illegally imported cigarettes, the proceeds of which are used to purchase guns and ammunitions.

This year, a total of two new cigarette manufacturers — Nostic Agricultural & Manufacturing Ltd — and Hamburg International Ltd as well as new South Africa-based distributor Pacific Tobacco entered the local market.

Up to 2010, Carreras, a subsidiary of British American Tobacco Company, was the exclusive local distributor of cigarette brands Dunhill, Matterhorn, Craven A and Rothmans, and controlled approximately 99 per cent of market share. Musson Jamaica, which distributes Marlboro and Green brands, accounted for the remaining one per cent.

But Steele says market demand has changed for legal cigarettes, mainly due to the frequent and excessive excise increase by the Government on a stick of cigarette which opens the market to the illegal imports.

He noted that the demand for cigarettes up to 10 years ago reached one billion sticks per year, but that has now declined to 50 per cent or less than 500 million. However, there has been an uptick in the demand for illegal cigarettes which is now being sold at $25 per stick, $20 less than the price of the legal operators.

“So if the illegal market demand is reduced, we only will be competing on who has the better brand, marketing strategy and so on,” Steele told the Caribbean Business Report.

“It doesn’t mean that we will take our competition for granted, but I rather to have the legal competitions than the illegal ones, because they will pay the taxes, abide by the regulations and we will be able to price properly. So we welcome the competition,” he continued.

The company intends to continue working on its Craven A and Matterhorn portfolios to keep ahead of the competition.