In 2023, the illegal cigarette trade across Europe continued to grow, with over 52 billion illicit cigarettes consumed across the continent, according to a new report by KPMG. The study, commissioned by Philip Morris International (PMI), reveals that nearly one in 10 cigarettes smoked in Europe is illicit, highlighting the persistence of organised crime and illegal manufacturing. The European Union (EU) alone saw 35.2 billion illicit cigarettes consumed, marking a slight increase from the previous year.
France remains the largest illicit market within the EU, accounting for nearly half (47.7%) of the region’s illegal cigarette consumption. The country lost an estimated €7.3 billion in tax revenue due to this trade. In total, governments across the EU missed out on €11.6 billion in tax income in 2023, up from €11.3 billion the previous year.
The KPMG report also indicates that organised crime groups are becoming more sophisticated, shifting production sites closer to major Western European markets. In 2023, over 110 clandestine factories were dismantled, with law enforcement agencies playing a crucial role in disrupting these operations.
Rise in Counterfeit and Contraband Cigarettes
The consumption of counterfeit cigarettes, which make up a significant portion of the illicit market, reached 12.7 billion in the EU in 2023. This marks the fourth consecutive year of growth in counterfeit cigarette consumption, driven mainly by high-tax, high-price markets like France and the UK.
While counterfeit cigarettes are a key issue, other forms of illicit trade, including contraband and ‘illicit whites’—cigarettes produced legally in one market but smuggled into another without paying taxes—are also on the rise. Non-domestic cigarette consumption in Europe, including both legal and illegal cross-border purchases, reached its highest level in 2023, with 15.5% of all cigarettes consumed being non-domestic.
Call for Stronger Policy and Law Enforcement
PMI is urging European regulators to address the issue of illicit cigarette trade with a more data-driven, consumer-focused approach. Christos Harpantidis, Senior Vice President of External Affairs at PMI, criticised current policies, stating that high taxation and restrictive regulations are pushing adult smokers towards the black market.
“We are witnessing organised crime groups expanding their operations, bringing illegal production closer to consumers. This is a direct result of failed policy approaches,” Harpantidis said. He called for a balanced strategy that combines tough law enforcement with consumer education and a predictable regulatory environment.
While acknowledging the efforts of law enforcement agencies, Harpantidis stressed the need for a more holistic approach that includes public-private partnerships and awareness campaigns to tackle the root causes of illicit trade.
Signs of Improvement in Some Countries
Despite the overall increase in illicit cigarette consumption, the report revealed positive trends in some European countries. In 25 of the 38 countries included in the study, illicit consumption levels were either stable or declining. Notably, Italy, Poland, Romania, and Spain reported lower levels of illegal cigarette consumption, thanks to stronger enforcement and coordinated efforts between governments and law enforcement agencies.
However, the report highlights that the rise in illicit cigarette consumption in Ukraine and the UK is contributing to the continent-wide increase.
Impact of Illicit Trade
The illegal cigarette trade has far-reaching consequences for European societies. It deprives governments of crucial tax revenue, fuels organised crime, and undermines public health efforts to reduce smoking. PMI’s Harpantidis warned that illicit cigarettes, often produced in unsafe conditions, are harmful to consumers and hinder the progress of smoking cessation initiatives.
PMI continues to advocate for greater collaboration between public and private sectors to combat the illegal tobacco trade. The company is also supporting efforts to promote smoke-free alternatives for adult smokers who do not quit.
For more information about PMI’s illicit trade prevention efforts, visit PMI.com.
