As cigarette company Carreras Limited pushes to tackle the illicit trade, duty-not-paid (DNP) or illegal cigarettes, it said, remains one of its biggest competitors in Jamaica.

The products, which are largely unregulated, and most times not compliant with the legal industry’s quality standards, the cigarette company said not only erodes tax revenues but also eats into its profitability as it reduce sale volumes.

“Carreras has a 360 strategy to tackle this menace through government engagement and commercial activities. Our commercial efforts are led by the recent launch of our Pall Mall Ultra low-price variant and a customer base expansion which aims to give consumers an opportunity to access a legitimate product at competitive price versus illicit options,” the company’s management said in its recently released annual report.

“In 2023, Carreras was instrumental in the re-establishment of the National Anti-Contraband Committee, which is a multi-government and private stakeholder grouping that develops and implements initiatives to educate, increase awareness and improve enforcement to combat the illicit trade,” the report stated.

Illicit cigarettes, which continues to rob Carreras of millions annually, also opens up increases in excise as the price of legitimate cigarettes becomes higher, thereby diverting consumers to DNP brands. This, while Carreras, in upholding regulatory requirements, said it had to pay out over $10 billion to local tax authorities in 2023. Through ongoing engagements with government, the company said it, however, continues to agitate for a balanced excise regime given the possible impact of the excise policy on the growth of the illicit market.

Notwithstanding the challenges, the company at the end of its 2023 financial year ended December 31, 2023 pulled in revenues of $13.8 billion with net profit $3.5 billion.

Having changed its financial reporting year from March 31 to December 31, Carreras’ financial year, which covered nine months in 2023, was able to positively survive the effects of a 16 per cent price increase in combustibles brought on by accumulated inflation over a six-year period coupled with the increased presence of illicit threat.

“Starting with combustibles, revenue for the 2023 calendar year increased 10 per cent over the previous calendar year driven by a price increase. This represented the third-consecutive year of delivering volumes of over 400 million sticks of combustible cigarettes. All our brands delivered expected results. We are encouraged by the loyalty of our Craven A and Matterhorn consumers who remain loyal to our strong brands,” the directors said.

Noting some success with its route to market efforts combined with focused activations which have paved the way for its Pall Mall line to experience a 12 year-on-year growth in 2023, the brand, which was introduced as a ‘catcher brand’, it said continues to make inroads in the fight against illicit trade as it continues to offer customers a cheaper alternative to its more premium cigarettes.

Now focused on plans to grow its business in the nicotine market, the launch of the globally recognised Vuse vaping brand to retailers last September, it said, is to further diversify product offerings, providing consumers a wider range of more affordable and safer choices as it transitions to become a multi-category company.

“As we continue our growth agenda, we aim to further increase market reach and penetration, and strengthen our brands’ identities. Investment in research and development to introduce new flavours, designs, and features that resonate with evolving consumer preferences, and the exploration of opportunities to expand into new geographical regions and distribution channels, will also continue to be our focus as we aim to adapt and adjust as consumers’ needs and priorities simultaneously change,” the directors said of the outlook.