Illicit Cigarettes in European Union at Highest Level Since 2015, KPMG Study Shows
Philip Morris International Inc. (NYSE: PM) today issues an urgent call for effective policymaking to counter the growing threat of illicit trade in the EU. In 2024, 38.9 billion illicit cigarettes were consumed in the region—the highest level since 2015—accounting for 9.2% of total cigarette consumption, with governments losing as much as €14.9 billion in tax revenues at a time when many countries face intense economic pressures.
PMI believes that exacerbating the issue are steep and abrupt tax increases, benefitting criminals who supply unregulated, untaxed and inferior products, including counterfeits, at a lower price. To combat this growing threat, PMI urges the adoption of evidence-based regulation with balanced and predictable taxation through tax calendars, continued public-private collaboration and enhanced support of regional and national law enforcement agencies, as criminal organizations dealing in illicit cigarettes have cemented their presence in higher-priced Western European countries.
According to the 2024 KPMG study, commissioned by Philip Morris Products SA, a large number of counterfeit cigarettes were consumed in the EU in 2024: 15.3 billion, a 20.2% increase vs. 2023. Additionally, so-called “illicit whites”—legally manufactured cigarettes smuggled across borders to countries where they have limited or no distribution—reached 8.2 billion.
“The illicit tobacco trade threatens the European economy, public health, security and social stability; today, higher-taxed and higher-priced markets such as France and the Netherlands are especially impacted by illegally imported and counterfeit goods,” said Christos Harpantidis, PMI’s Senior Vice President, External Affairs. “Its massive socioeconomic impact negatively affects tax collection, job creation, and legitimate businesses, the engine of our European economies. The availability of cheap, unregulated cigarettes in the underground economy also impairs efforts to reduce smoking rates and achieve a smoke-free future.”
The 2024 KPMG report indicates the increase in illicit cigarette consumption was primarily driven by France and the Netherlands. The study points to an especially alarming situation in France, where 18.7 billion illicit cigarettes were consumed in 2024, almost 7.8 billion of which were counterfeits. In the Netherlands, illicit cigarette volumes increased drastically, by 1.1 billion—more than doubled in a year—reaching 17.9% of total consumption. Had these cigarettes been legally purchased, an additional €9.4 billion would have been raised in taxes in France and almost €900 million in the Netherlands.