New Brunswick smokers, drinkers spending record amounts at home

Trapped inside the Atlantic bubble with few alternative supply options, New Brunswick smokers and drinkers grounded by the pandemic have increasingly been buying locally and legally to satisfy their cravings.

Over the summer, retailers in New Brunswick sold the equivalentof 1.5 million packs of cigarettes, four million cans of beer and 10,000 litres of hard liquor more than they did last summer, as cheaper options inthe province legal and otherwise dried up.

In an email, Jennifer Vienneau ofthe New Brunswick Department of Finance said surging local tobacco sales and tax revenues are almost certainly linked to the unintended consequences of border controls put in place to combat the COVID-19pandemic.

"Due to the border and travel restrictions, we have seen an increase in sales at local retailers in some areas of the province," Vienneau said.

"These restrictions have undoubtedly reduced cross-border purchases and, to a certain extent, made the entry of contraband products in N.B. more difficult."

The spike in legal local purchases of cigarettes (up 30 per cent) and alcohol (up 13 per cent) has been welcome for the province, which collected an unexpected $10.1 million in tobacco tax and approximately $8 million more in alcohol levies over the three months between July and September compared to a year earlier.

Hints at larger-than-suspected black market

But thejump also hints at a black market operating in the province during normal times that may be larger than provincial officials realized.

Canada's National Coalition Against Contraband Tobacco, a tobacco-industry-sponsored group that advocates for aggressive enforcement of laws against underground cigarette sales, believes pandemic shutdowns have helped expose the scope of that problem.

In the past contraband, cigarettes arriving in New Brunswick have mostly come through Quebec in vehicles, but since March New Brunswick's borders have been closed to normal traffic with checkpoints staffed by law enforcement 24 hours a day to turn away non essential travellers.

That has causedsignificant problems to smugglers and driven their consumers to legal retailers according to coalition spokesperson Ron Bell.

"It's easier to pick off a suspicious vehicle when you see somebody with Manitoba plates or somebody with Ontario plates driving to New Brunswick. It's highly suspicious because here it is, the provinces are shutting down their borders," Bell said.

No other option but to buy legal

"A huge customer base of smokerswere faced with no other options but to buy legal cigarettes. So all of the legal manufacturers actually saw an increase in sales during the prime COVID shutdown periods."

For several years, New Brunswick has estimated that contraband tobacco floods localmarkets with the equivalentof about 50 million cigarettes annually. That's about 10 per cent of legal sales and an amountthat, if true, would cost the province $13 million each year in lost tax revenue.

But the legitimate sale of 39 million cigarettes more than expected over just three months this summer suggests the 50-million cigarette estimate for the annual size of the black market might be on the low side.

Organized alcohol smuggling less of an issue

Vienneau pointed out normal cross-border shopping by averagecitizens has also been shut down in New Brunswick, so it's impossible to know how much slipping over to Quebec for a cheap six-pack and low-tax cigarettes might be contributingto the increase in domestic legal sales as well.

"There are many factors that could explain the increase in tobacco revenues during the pandemic," she said in the email.

Organizedsmuggling of alcohol is less of an issue in New Brunswick, and sales increases of beer, wine, liquor and coolers this summer, although large, were less dramatic than for cigarettes.

NB Liquor'sSarah Bustard said the pandemic has changed sales patterns, with more at-home consumption and higher sales in border communities that are now cut off from Quebec, but noted there is no single reason why volumes have climbed.

"Customers are buying larger pack sizes and more products at each visit, which could be contributed to people trying to reduce the number of trips they make to our stores," she said.