Illicit whites: What are they, and how big is the problem?05 Apr 2022 · 3 min read
What are illicit whites?
Illicit whites are cigarettes that are in most cases legally produced in a country, but with the sole intention of being smuggled into other markets. Criminals often take advantage of vulnerabilities in Free Trade Zones (FTZs) to traffic these products.
There are multiple menaces associated with illicit whites. These products not only cause tremendous tax revenue losses for governments—they also pose a security risk, and usually abuse the domestic regulations of the destination countries.
The global flow of illicit whites has been an increasingly pressing issue in the fight against illicit trade. This makes them highly attractive for criminals, as smugglers can generally avoid the risks of prosecution for intellectual property rights infringements that counterfeiters face.
As manufacturers of illicit whites can operate legally within a country, they have fairly sophisticated facilities where they are able to produce cigarettes of a higher quality than counterfeits. They can also avoid the litigation associated with counterfeiting activity.
The exponential rise of a global problem
Since 2015, when illicit whites made up 38 percent of the illicit trade of tobacco, they have continued to increase significantly, according to PMI global estimates.
Having risen to 44 percent by 2016, the proportion of illicit whites peaked in 2018 to account for half of all illicit tobacco trade. Due to the recent increase in counterfeit cigarettes, the proportion lowered slightly to 48 percent in 2020.
In less than a decade, across the world, large-scale smuggling of so-called “illicit whites” has increased exponentially.
Source: PMI global estimates
The black market for cigarettes in the EU is estimated to have cost governments EUR 8.5 billion in tax revenues in 2020. This only serves to highlight how vital it is for the public and private sectors to work together to confront this issue.
Collaboration, regulation, and enforcement
Public-private partnerships are one solution to help stamp out illicit whites. All legitimate stakeholders benefit from working together to implement measures on the ground to eradicate this issue.
A strict regulatory framework that severely penalizes those involved, paired with well-funded and fully staffed law-enforcement teams, must also become a priority.
At PMI, we’re committed to working with these teams and governments to eliminate the flow of illicit whites.