BESESELIO – Lithuania shadow market initiative

BESESELIO – ”LITHUANIA WITHOUT A SHADOW”
Mikael Sundström, PR Sweden/Northern Europe COM, PA, CSR Sr. Manager
Darius Augaitis, PR Lithuania CEO
Date 2015.10.30
Executive Summary
Lithuania shadow market
1.
2.
3.
Economic impact: loss of state revenue
Social impact: criminality, uncontrolled
sales increasing availability for underage.
Quality issues putting all consumers at risk
Ethical impact: alcohol associated with
shady business, tainting public perception
of legitimate producers and suppliers
2
Executive Summary
Issue
•
•
•
•
•
Illegal spirits market of considerable size; 36% of total spirits market (and increasing)
Alcohol industry suffering from bad reputation with Authorities and Ministries
Political support for increased alcohol excise taxes, driven by fiscal and public health-concerns
Vocal and influential anti-alcohol NGO’s
Misuse of alcohol and consumption data at record levels
Ambition
•
Fight illegal spirits market
• Decrease criminality
• Improve public health
• Increase total excise collected
• Increase sales/share of legitimate premium spirits
•
Curb excise tax increase
•
Improve industry reputation and relations with Authorities and Ministries
3
Executive Summary
How
•
•
•
•
•
•
Single-out shadow market as the major threat to public health and excise tax income
Support legal enforcement
Engage general public, especially the ones directly affected - Network approach
Website where individuals can report outlets selling illicit goods in a map
Scoreboard calculating reported outlets, outlets shut down and estimated state revenue lost
Full disclosure of information to Police Authority, resulting in local police department visit
reported outlet in order to confirm and close down
Result
•
•
•
•
•
•
Decreasing illicit trade
Increasing tax revenue
Less pressure to increase excise on spirits – moderate increase in C15
Political and public awareness of size and scope of shadow market
Improved reputation of spirits industry
Improved relations to Authorities and Ministries
• Trade association seen as legitimate actor with whom to discuss policy and action
• Opening doors to discuss excise taxes, marketing regulations
4
Website visuals
Country level
City level
Score board
Number of reported illicit outlets
Number of illicit outlets closed down
Estimated lost state revenue
5
Website details
Reporting of outlets
Any person can tap the map (or write exact address), chose options (alcohol, tobacco,
fuel), make comment, add photo. Other people can later support the sighting
Verification of reported outlet
Administrator checks that reported outlet is not residency of municipality, police etc.
Details of outlet are not visible before administrator verification. Personal information
(names, exact address) never visible to public, spot generated show radius of 500 metres.
Names and exact address only visible to Police after confirmation by administrator.
If several individuals independetly report same outlet, spot gets darker
Calculation of estimated lost state revenue
Economic/statistical evaluation of annual loss, divided into days, hours and seconds... And
then starting counting from 1st of Jan each calendar year.
6
Organisation & Budget
Owner
Beseselio, NGO created & financed by Trade Association (strongly supported by PR Lithuania/NE)
Funder
Alliance of Legitimate Bussiness
Partners (private and public)
"Supermothers” NGO
Student organisations
Police Authority
Government
Costs
Development of idea
Programming
Map licence
Administrator
Public Relations support
TOTAL
10 000 Euro
5 000 Euro
1 200 Euro/year
10 000 Euro/year
3 000 Euro/year
29 200 Euro (year 1); 14 200 Euro annually from year 2
7
APPENDIX
8
APPENDIX
Basic information Lithuanian market
Country: Lithuania
GDP: 8209,9 mln EUR (2015 1st Quarter)
Population: 2 944 459
Size of alcohol market (consumption):
• Wine: 30572,1 kL
• Spirits: 35757,9 kL
• Beer: 265900 kL
• Cider: 13800 kL
Trade associations: Alliance of Legitimate Business, ABBI
Perception of alcohol industry: alcohol industry is looking for more profit and to increase
sales but during the last year perception of the government change as both parts found the
same enemy – shadow market. The biggest progress in better relationships was reached with
the tax authorities, Government, Alcohol & Tobacco control department.
9
APPENDIX
Basic information Lithuanian market
Political view : Fight against shadow market has become a government priority. Government
is tighten responsibility laws for illegal alcohol production and sales, more regulation in kiosk
and other places where you can buy alcohol.
Political willingness: High. Government wants tighten accessibility of alcohol in general but
don’t forget about shadow market problem
Policy instruments:
1. Laws (alcohol control law)
2. Prohibitions (ex. prohibition to sell cosmetic spirits, penalties for home
production, jail)
3. Programs and projects (ex. “Be Seselio“), such as bonuses to customs officers
10
APPENDIX
Excise tax on beer/wine/spirits
20092014 2014.04.01
Since 2015.03.01
N
o
2,46 euro for 1 per cent the
2,71 euro for 1 per cent the
3,11 euro for 1 per cent the
actual percentage of alcohol
actual percentage of alcohol by actual percentage of alcohol
by volume percentage, which c volume percentage, which is by volume percentage, which
h determined per hectolitre
is determined per hectolitre
is determined per hectolitre
a
n
g
e
16,8 euro for hectoliter
24,62 euro for hectoliter
28,67 euro for hectoliter
s
Date (Calibri 16 pts)
2009
Beer
Wine and other
fermented drinks
(up to 8,5 per cent
pure alcohol)
Others
57,34 euro for hectoliter
65,16 euro for hectoliter
72,12 euro for hectoliter
Spirit products with
less than 15 per
62,56 euro for hectoliter
cent of pure alcohol
81,38 euro for hectoliter
89,49 euro for hectoliter
Spirit products with
more than 15 per 88 euro for hectoliter
cent of pure alcohol
115,85 euro for hectoliter
126,27 euro for hectoliter
Ethyl alcohol
1279 euro for pure alcohol
hectoliter
1 291,71 euro for pure alcohol 1 320,67 euro for pure alcohol
hectoliter
hectoliter
11
THANK YOU!
[email protected]