A problem without borders
The independent 2023 KPMG annual study on illicit cigarette consumption in Europe has revealed alarming levels of contraband and counterfeit cigarettes across 38 European countries, with organized criminal groups moving their operations closer to higher-taxed and higher-priced Western nations, such as France.
Illicit consumption has grown for the fifth consecutive year in Europe, reaching 52.2 billion cigarettes across the 38 countries included in this study. Today, nearly one in 10 cigarettes on the continent are illicit.
In the European Union (EU), an estimated 35.2 billion illicit cigarettes were consumed in 2023, accounting for 8.3 percent of total consumption in the EU, an increase of 0.1ppt compared to 2022. Overall, governments in the EU lost an estimated EUR 11.6 billion in tax revenue, up from EUR 11.3 billion in 2022.
France is still leading the ranking as the country with the largest illicit consumption in all of Europe, with 16.8 billion illicit cigarettes and EUR 7.3 billion in tax revenues lost.
Counterfeit cigarettes remain one of the main sources of illicit consumption in the EU, with 12.7 billion (36 percent) cigarettes consumed—as criminal networks increasingly target higher-taxes and higher-priced markets.
Interviews with law enforcement agencies included in the KPMG report shed light onto transnational organized crime’s professionalization of their role in the supply chain of illicit cigarettes: Criminals have expanded the setup of illegal factories, targeting smokers in EU member states that currently struggle with purchasing power. In 2023 alone, law enforcement data shows that 113 clandestine cigarette manufacturing sites in 22 European countries were disrupted by regional and local authorities.
“We are witnessing an evolution of organized crime groups in Europe,” said Christos Harpantidis, Senior Vice President of External Affairs, PMI. “We consider this phenomenon to be a direct consequence of failed policy approaches that have not done enough to curb illicit trade and reduce smoking prevalence, and is putting consumers, governments, legitimate businesses, and society alike at risk.
“Law enforcement agencies have played an instrumental role in disrupting crime rings dealing in clandestine cigarette production across Europe, as well as cross-border, contraband operations. However, if we want to curb illicit trade in the region altogether, we need a holistic approach that complements tough penalties and strong law enforcement with awareness and educations campaigns about the real-life impact of illicit trade, a predictable fiscal and regulatory environment where adult smokers are not being driven to the black market, and coordinated and committed public-private partnerships.”
PMI praises European law enforcement agencies for their continued crackdown on criminal networks that profit from the illicit tobacco trade, and calls on regulators to advance a sensible, data-driven policy approach that puts consumers—and public health—front and center, and that effectively addresses the challenges posed by the millions of adult smokers who are turning to the black market rather than quitting or switching to smoke-free products.
KPMG 2023 report: Illicit cigarette consumption in Europe
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In Europe, consumption of illicit cigarettes has grown for the fifth consecutive year.
Words on screen read: Consumption of illicit cigarettes in Europe Growth for the fifth consecutive year
Source on screen reads: “Illicit cigarette consumption in Europe: Results for the calendar year 2023”, KPMG September 2024 [Commissioned by Philip Morris Products SA]
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According to the latest report from KPMG, 52.2 billion contraband and counterfeit cigarettes were consumed across 38 European countries in 2023.
Of those, 35.2 billion were consumed in the European Union.
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£11.6 billion in tax revenue losses
8.3% of total cigarette consumption in the EU was illicit
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Around 20 billion counterfeit cigarettes were consumed in Europe last year, making them one of the largest sources of illicit consumption on the continent.
Counterfeit consumption is highest in France, the largest illicit market in Europe.
Notably, France consumed 16.8 billion illicit cigarettes in 2023.
Nearly half the total illicit consumption of the EU.
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France: 47.7% of total illicit cigarette consumption in the EU
Estimated tax revenue loss of £7.3 billion in France.
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Organized crime has expanded its network of illegal factories in Western Europe, and continues to target smokers who struggle to afford legitimate products in higher-taxed and higher-priced EU member states.
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Organized crime at least 113 illicit manufacturing sites raided in 22 European countries in 2023.
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Criminals are thriving while putting consumers at risk.
Illicit trade deprives governments of excise revenues and undermines smoking cessation policies.
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There is, however, encouraging news in the KPMG report: Italy, Poland, Romania and Spain are among the countries that have witnessed sizeable decreases in illicit cigarette consumption.
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25 European countries share of illicit consumption stable or declining vs 2022.
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The KPMG report should serve as a reminder of how vital it is to wage a diligent fight against illicit trade.
Millions of adult smokers are turning to the black market instead of quitting cigarettes or, for those who don’t quit, switching to better, smoke-free alternatives.
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Diligent fight against illicit trade
Prevent millions of adult smokers from turning to the black market
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So, what is the best way to address this growing problem in Europe, and beyond?
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Addressing this problem in Europe and beyond
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Law enforcement action and deterrent penalties should be the cornerstone of any strategy to tackle illicit trade.
Predicable fiscal calendars are also much-needed instruments in addressing illicit trade and working to reduce smoking prevalence.
Equally, awareness and education are powerful tools.
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Effective law enforcement
Predictable fiscal calendars
Awareness and education
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Preventing illicit trade is central to the success of public health and public security in Europe and beyond.
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Delivering a smoke-free future
Philip Morris International Crest on screen.
Concerted action in Europe, and beyond, can have long-lasting impact. We’re committed to encouraging open dialogue about the most effective ways to combat illicit trade in tobacco and other nicotine-containing products by involving manufacturers, suppliers of key components, technology providers, customs authorities, and other law-enforcement agencies.
As we advance on our journey toward delivering a smoke-free future, we are increasing our efforts to secure both our supply chain and the products we sell, and protect consumers and our brands from smugglers and counterfeiters.
We collaborate with law enforcement agencies and other organizations all over the world to root out and shut down illegal activities, including counterfeiting and smuggling operations. PMI also continues to support relevant European regulations, such as the EU Tobacco Products Directives’ tracking-and-tracing provisions.
Illicit cigarette consumption in Europe in 2023
(Click on a country or use the magnifying glass to see figures from each country)