Suppliers of Imported Cigarettes to Canada
Sales of Smokes from Switzerland Spike 665% Since 2004
Sep 2, 2009
In just four years, Switzerland has become the leading exporter of imported cigarettes to Canada.
Tobacco cigarette imports from Switzerland were down by 1% in 2008 from the same period in 2007. For the first 6 months of this year, Swiss cigarette sales to Canada declined a further 6.2% over the first half of 2007.
However, those reductions in imported Swiss cigarette sales to Canada are comparatively mild.
Canada’s imported cigarettes from Switzerland have surged by over 66,000% from $13,300 in 2004 to $8.8 million in 2008. Sales have been steady at $4.2 million during the first 6 months of 2009.
Total Imported Cigarette Sales from All Countries
In 2008, Canadian imports of cigarettes from all countries were down by a staggering 94.9% to US$13.8 million. Imported cigarette sales to Canada were $270.8 million just one year earlier.
This steep decline was mostly due to the fact that cigarette imports from Mexico plummeted from $256.4 million in 2007 to just $49,514 last year. Cigarettes shipped from the United States into Canada fell by 61.7% from $2.6 million to $980,781 over the same timeframe.
Curiously, both Mexico and the U.S. ship cigarettes to Canada duty free under North American Free Trade Agreement (NAFTA) while cigarettes from Switzerland were subject to a 12.5% excise tariff under international harmonized system code 240220.
Top Nations Supplying Tobacco Cigarettes to Canada
The following countries shipped over 99% of all cigarettes that Canada imported in 2008.
- Switzerland … US$8.8 million (64.1% of total imported cigarettes) – down 1% from 2008
- Russia … $1.8 million (13.3%) – up 1,091,094%
- Lithuania … $1.4 million (10%) – up from nil
- United States … $980,781 (7.1%) – down 61.7%
- Germany … $365,063 (2.7%) – down 43.6%
- Argentina … $122.3 million (0.9%) – down 40.3%
- Indonesia … $76,483 (0.6%) – down 57.8%
- Mexico … $49,514 (0.4%) – down 99.98%
- United Kingdom … $25,672 (0.2%) – down 62.3%
- Japan … $21,969 (0.2%) – down 10.7%.
The top 4 countries (Switzerland, Russia, Lithuania, United States) accounted for almost 93% of all packaged tobacco smokes delivered to Canada last year.
Latest Statistics on Cigarettes Imported into Canada
During the first 6 months of 2009, Switzerland has improved its market share as the top supplier of tobacco cigarettes to its Canadian trade partner.
- Switzerland … US$4.2 million (78% of total imported cigarettes) – down 6.2% from first 6 months of 2008
- Lithuania … $450,819 (8.4%) – down 39.5%
- United States … $324,651 (6%) – down 36.5%
- Germany … $252,537 (4.7%) – up 42%
- Indonesia … $69,874 (1.3%) – up 155.1%
- United Kingdom … $33,917 (0.6%) – up 161.9%
- Japan … $11,151 (0.2%) – down 16.4%
- France … $6,946 (0.1%) – down 36.8%
- Belgium … $6,032 (0.1%) – down 50.8%
- China … $4,215 (0.1%) – up 1%.
In the most recent period, Russian cigarette exporters showed the largest decline. Canadian imports of Russian cigarettes dropped by 99.9% from $1.8 million in the first half of 2008 to only $2,301 in Canada-bound shipments for the first 6 months of 2009. But to give some perspective, even the paltry $2,301 represents more than the dollar value for cigarettes that Russia exported to Canada in the 3 years before 2007.
Reasons for Popularity of Imported Swiss Cigarettes
In June 2007, the huge multinational corporation Altria announced that the company was shifting cigarette production from the U.S. to European plants answering to its Philip Morris headquarters in tax-friendly Switzerland.
Altria owns 100% of Philip Morris International, one of the world’s leading cigarette manufacturing companies. Philip Morris makes 7 of the world’s most popular cigarettes including the number one bestseller Marlboro.
Therefore, Altria’s move of cigarette production to Switzerland is a major reason for the increase in Swiss cigarette exports to Canada and a decrease in US cigarette shipments to Canada.
Switzerland-Liechtenstein Tariff
Effective July 1, 2009, Canada announced 3 bilateral free trade agreements including the Switzerland-Liechtenstein Tariff. Switzerland can now ship cigarettes to Canada without having to pay the 12.5% excise duty imposed on tariff classification code 240220.
Canadian imports of cigarettes from Switzerland are now set to increase at an even faster rate.
Sources: Industry Canada's Trade Data Online, based on Statistics Canada reports as of September 1, 2009 and Canada Border Services Agency's online customs tariff manual.
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