How to understand the impact of illicit trade on business around the world... Market Research Company Euromonitor International has released a new white paper - How to Understand the Impact of Illicit Trade on Business Around the World...
Globally, an increasing number of goods and brands are affected by illicit trade, from consumer products like electronics, apparel, pharmaceuticals and alcoholic beverages to other industries such as vehicle lubricants and auto parts. The global value of illicit trade and transnational activities is estimated at between 8% and 15% of global GDP, according to the World Economic Forum, potentially reaching as high as $12trn in 2014 which is approximately the size of China’s total economic output in that same year.
Because of their nature, illicit trade activities continue to become increasingly complex and sophisticated and can have serious negative impacts on consumers, governments and licit companies. For example, according to Euromonitor International, in 2013 the volume of illicit cigarettes consumed in the world was approximately 570bn sticks with an estimated value of $39bn, which was nearly identical to the value of revenues not collected in taxes if the products were sold in the licit market. This means governments from around the world lost $40bn in tax revenue that could have been spent on improving their countries.
‘It is critically important for any stakeholder trying to tackle illicit trade to understand the landscape and structure of the specific illicit market and to consider different factors that can be present depending on local conditions,’ states Lourdes Chavarria, Consulting Manager at Euromonitor International.
According to Euromonitor, many industries at risk could benefit from a better understanding of how illicit trade operates and its negative impact on the licit business community. ‘Illicit trade is costing brand owners and legitimate manufacturers millions of dollars in lost revenues,’ concludes Chavarria.
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