Clarity sought on status of anti-forestalling regulations

ACS and FWD have raised concerns about the supply of legitimate tobacco as the government is yet to take a decision on anti-forestalling regulations.

Responding to a letter by the trade associations representing the convenience and wholesale sectors, Treasury minister Kemi Badenhoch said the restrictions would remain in place until the government decides on duty rate changes.

“While it was confirmed there would not be a Budget this autumn, final decisions on the timing of tobacco duty rate changes are still to be made. An announcement will be made in due course. In the meantime, anti-forestalling restrictions remain in place,” Badenhoch, the Exchequer Secretary to the Treasury, said.

The Association of Convenience Stores (ACS) and the Federation of Wholesale Distributors (FWD) have last month written to the Treasury, urging the government to lift the pre-Budget allocation rules on stock to ensure that businesses can obtain enough supply to meet consumer demand.

The tobacco forestalling regulations are ordinarily in place to ensure that retailers do not stockpile products and take advantage of lower duty rates.

The organisations now raised concerns that stock shortages would lead to an increase in the illicit market.

“Wholesale tobacco sales to independent retailers went up by 18 per cent yoy during the first lockdown, and restrictions do not reflect the increased demand we expect to see in the months ahead,” commented James Bielby, FWD chief executive.

“Wholesalers have to anticipate demand well in advance in order to offer retailers the stock they need, so delays in giving legitimate distributors a clear steer on allocations is a gift to illicit tobacco traders who will pick up any shortfall in supply.”

James Lowman, ACS chief executive, added: “Retailers need the government to make the right decision on the status of the forestalling restrictions urgently. Sales patterns during the COVID-19 pandemic have been unpredictable and extraordinary. Continued disruption from COVID-19, combined with the end of the EU Exit transition period at the end of this year, means that setting allocations would effectively be a guess, and that would lead to a risk that retailers will face shortages.

“We must do everything we can to ensure that customers are not forced to seek out tobacco products on the illicit market.”