Govt could lose $1B in revenue this year as cigarette smuggling surges – DEMTOCO

…announces $2.27B in after-tax profit for 2023

With cigarette smuggling at an all-time high in Guyana, the Demerara Tobacco Company (DEMTOCO) Limited has estimated that the country could lose as much as $1 billion in revenue from the illicit trade this year.
DEMOTOCO held its 90th Annual General Meeting on Friday at the Marriott Hotel in Georgetown, where Managing Director Vijay Singh shared the company’s 2023 results and strategic achievements.
At the meeting, Singh addressed the challenges posed by the illicit trade of tobacco products, which he noted has significantly impacted the industry. The market share of illicit cigarettes in Guyana has risen alarmingly to an estimated 29 per cent, representing a 100 per cent increase in just one year.
The managing director emphasised the urgent need for intervention, stating, “If this trend continues, we could see an estimated loss of G$1 billion in government revenue by the end of 2024.”
DEMTOCO has been advocating for stronger enforcement to combat the illicit trade, which undermines legitimate businesses and poses risks to the economy as well as put citizens at risk due to unregulated products.
In the 2023 report, Singh disclosed that two key brands are sold illegally in large quantities across the country. This, he noted, continues to be a direct threat to DEMTOCO hence combating the illicit trade remains one of its main priorities.
The Managing Director is of the view that an effective anti-illicit trade strategy has to be multi-sectoral, involving all relevant Government agencies, the Private Sector and in some facets, even regional entities.
Additionally, he stated that focus should be placed on enforcement to address non-compliance and adherence to all laws such as Excise Tax Stamps and the packaging and labelling requirements as mandated by the Tobacco Control Act of 2017.
Nevertheless, Singh said the company appreciated the efforts of local law enforcement agencies such as the Guyana Revenue Authority (GRA) and the Guyana National Bureau of Standards (GNBS) in seizing illegal products. In addition to the number of seizures done in 2023, the company also lauded GRA’s publishing of official notices to sensitise the public on the legal brands of cigarettes.
At last year’s AGM, Singh had raised similar concerns on the negative impact the rapid increase in, and far-reaching presence of, illegal cigarettes is having on the company and Government revenues as well as its role in incentivising criminal activities in the country.
The Managing Director had pointed out last April that in neighbouring Suriname, illicit tobacco trade was left unchecked and ruined the revenue streams for the Government in Paramaribo and the legitimate industry in the Dutch-speaking country.
DEMTOCO has been raising awareness of the illegal trade in Guyana through active engagement with regulators, the Government, and the Private Sector.
Profits
Meanwhile, DEMTOCO on Friday also reported a 9.7 per cent increase in profits after tax, climbing from $2.07 billion in 2022 to $2.27 billion in 2023.
According to the company, this growth has been supported by a 4.4 per cent increase in revenue that was driven by enhanced operating efficiencies. However, it was noted that these results were achieved amid a challenging global environment characterised by logistical disruptions, inflationary pressures, and international political tensions, which DEMTOCO successfully navigated in order to deliver significant value to its shareholders.
During his presentation, Singh highlighted the company’s strategic focus on strengthening its portfolio of international brands.
“Our premium brand Dunhill has once again shown outstanding performance, with a growth of 9.5 per cent for the third consecutive year. This is a testament to our commitment to innovation and providing a premium experience to our consumers,” the Managing Director said.
Additionally, it was noted that the migration of the Bristol brand to the globally-recognised Lucky Strike has positioned DEMTOCO to leverage brand strength and drive future growth.
However, despite the challenges faced, DEMTOCO’s resilience and strategic initiatives have ensured sustained growth and shareholder value. The Managing Director extended gratitude to all stakeholders, including the dedicated DEMTOCO team and the leadership provided by the Board of Directors, which have been instrumental in achieving the company’s goals.
“As we continue to navigate through these challenging times, our focus remains on innovation, strategic growth, and combating illicit trade to ensure the prosperity of DEMTOCO and contribute positively to Guyana’s economy,” Singh posited. (G8)