KPMG, in collaboration with Philip Morris Internationalpublishes its annual study on the consumption of illicit cigarettes in the European Union (EU) in 2023, warning against high levels of cigarette smuggling and counterfeiting in the EU and the threat it poses to public health and safety, as well as to the economy. Specifically, the report states that By 2023, 35.2 billion illegal cigarettes will be consumed in the regionrepresenting 8.3% of total EU consumption and an increase of 0.1 percentage points compared to 2022.
France leads illicit consumption with 16.8 billion illicit cigarettes and a loss of tax revenue estimated at 7.3 billion euros. On the contrary, countries like Spain have one of the rates of illicit cigarette consumption. According to the study, the country has seen a decrease in smuggling and counterfeiting of total cigarette consumption of 0.9 percentage points in 2023, reaching 2.8%. In addition, it is estimated that the loss of tax revenue in Spain due to this illicit trade amounts to 210 million euros.
On the other hand, the study reveals that counterfeit cigarettes remain one of the main sources of illicit consumption in the region with 12.7 billion cigarettes consumed (36%), while criminal networks increasingly target markets where taxes and prices are higher. Thus, making an overall analysis, European Union governments have lost around €11.6 billion in tax revenue, compared to €11.3 billion in 2022.
“We are witnessing an evolution of organised criminal groups in Europe, locating their production facilities increasingly close to Western European countries.“We believe this phenomenon is a direct consequence of failed policy approaches that have not done enough to curb illicit trade and reduce tobacco use, and which puts consumers, governments, legitimate businesses and society at risk,” said Christos Harpantidis, Senior Vice President, External Affairs, Philip Morris International.
“Law enforcement has played a decisive role in dismantling criminal networks dedicated to clandestine cigarette production across Europe, as well as cross-border smuggling operations. However, if we are to fully curb illicit trade in the region, we need a comprehensive approach that complements tough penalties and strict law enforcement with awareness-raising and education campaigns on the real impact of illicit trade, in a predictable fiscal and regulatory environment that ensures smokers are not pushed into the black market, and in coordinated and committed public-private partnerships,” he stressed.
According to information provided by law enforcement agencies, media reports and PMI estimates, criminals have expanded the installation of illegal cigarette factories. Only in 2023, Data from security forces and agencies show that regional and local authorities They have dismantled at least 113 clandestine cigarette manufacturing centres in 22 European countries.
In addition to the steady growth in counterfeit cigarette consumption for the fifth consecutive year – driven mainly by the United Kingdom and Ukraine – there is now growth in all other categories of illicit trade, including illicit whites and smuggling. Coupled with the continued recovery in legal cross-border volumes, following the end of COVID-related travel restrictions in 2022, total non-domestic consumption also reached its highest level in history (15.5%), equivalent to more than one in six cigarettes.
Despite this scenario, the report shows that in 26 European countries in 2023, the share of illicit consumption is less than 10% of total consumption. Among them, 16 markets have a share of illicit consumption below 5%. And in 25 of the 38 European countries included in the study, the share of illicit cigarette consumption remains stable or decreases compared to 2022, as is the case in Spain.
“It is really encouraging to see a decrease in illicit consumption in countries like Italy, Poland, Romania and Spain. We must continue to work with law enforcement and governments to ensure that illicit trade does not become an even bigger problem across the EU,” said Massimo Andolina, President of PMI’s European Region. “Illicit trade undermines efforts to reduce smoking prevalence; it is bad for public health and consumers and creates financial harm for governments and legal operators. Regulators must do their part to This fight is an absolute prioritywhile ensuring that smoke-free products are available and affordable to all adult smokers who do not quit smoking.
“To end tobacco use comprehensively, traditional tobacco control policies must be complemented by innovative approaches. Governments must recognize that adopting alternatives to cigarettes aimed at adults who would otherwise continue to smoke will reduce the harms associated with smoking much faster than existing measures alone,” Harpantidis said.
By pfirst time since its publication in 2006KPMG’s annual study has expanded its scope and included all Balkan countries. The survey now covers 38 countries: all 27 EU Member States, plus Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Ukraine and the United Kingdom.
The Balkan region showed a lower presence of illegal cigarettes compared to some Western European countries, such as France or the United Kingdom. Ukraine, for its part, continues to be the second country with the largest volume of illegal cigarettes consumed, with 8.4 billion.
This is the 18th consecutive year that KPMG has calculated illicit cigarette consumption in Europe.
