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Turkey's tobacco market troubled by smugglers, says JTI manager

İZMİR – Hürriyet Daily News | 4/25/2010 12:00:00 AM | BARÇIN YİNANÇ

The consumption of tobacco in Turkey dropped 6 percent in the first three months of the year compared to the same period last year, according to a representative of Japan Tobacco International.

The consumption of tobacco dropped 6 percent in the first three months of the year compared to the same period last year, according to a representative of a tobacco company who said 3 percent is due to the smoking ban and the other 3 percent due to the sales of smuggled cigarettes.

“The ratio of sales of smuggled cigarettes will increase at a multiplying rate,” Bilgehan Anlaş, the general manager of JTI Turkey, said Monday night in İzmir, arguing the yearly tax loss of the government can reach as high as $1 billion.

Due to high taxes in Turkey, there is a huge price difference in cigarettes sold in Turkey and the neighboring countries to the east, Anlaş told a group of journalists. “One in every five pack of cigarettes sold in East and Southeast Turkey are illegal,” he said. The price for a pack of cigarettes in Turkey includes 78 percent tax. The general rate Europe is 74 percent. The total tax loss for the government can reach $1 billion a year, said Anlaş, adding that the government is shooting itself in the foot by trying to maximize revenue via high taxes.

According to the JTI officials, which has 22 percent of the market in Turkey, as the price difference grows between Turkey and the neighboring countries, the profit margin of the smugglers increases, which raises the appetite for more smuggling and leads to smugglers taking higher risks. Anlaş also complained about the lack of an efficient fight against smugglers.

[HH] The only company to grow in first quarter

When it comes to JTI Turkey, it seems there is not much to complain about. Despite a 6 percent decline in cigarette consumption during the first three months of the year, JTI is the only company in the sector to post a growth, said Anlaş. The company’s share of the market grew from 5 percent to 22 percent over the past five years.

JTI decided to establish a new training center for its employees in the company’s factory in Torbalı, near the Aegean city of İzmir. After its first in Russia, the Global Functional Training Center is the company’s second such facility. Bill Schulz, member of the executive board of JTI, said it was not difficult to make a decision on the location of the new center.

“The developed human talent and the high production performance of the factory in Torbalı, made it clear that Turkey was the place to be,” he said talking via teleconference during the inauguration of the center.

JTI’s employees from all over the world will come to the center in Torbalı, which cost about $13 million to establish.

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