Some 53 billion illegal cigarettes were consumed in the European Union in 2015, 9.8% of the total trade, according to new research by KPMG.
The study, carried out on behalf of British American Tobacco, Imperial Tobacco, Japan Tobacco International and Philip Morris International, found that this activity costs EU governments (plus Switzerland and Norway) up to €11.3 billion a year.
Despite counterfeit cigarettes and 'Illicit Whites' (legally manufactured cigarettes that have been smuggled across borders) making up nearly 10% of all cigarettes consumed, this represented a marginal decrease compared to the previous year.
The 2016 Project Sun also revealed that 88% of illegal cigarettes were coming from non-EU contraband and counterfeit. Belarus was found the be the largest source of Illicit Whites.
France and Poland had the largest volume of counterfeit and contraband cigarettes. A total of 4.7 billion counterfeit cigarettes were consumed during the year.
In response to the report, Paul Adeleke, from Philip Morris Limited, said, “The illicit trade in tobacco products denies the state substantial legitimate revenue, at a time when there are constraints on exchequer finances, with consequent implications for spending on public services.
"In addition, it contributes to the creation and entrenchment of organised crime, because of the scale of the profits involved for illegal operators. Philip Morris International continues to devote significant resources in combating this problem as it strongly believes that effective solutions require solid cooperation between governments, law enforcement agencies, manufacturers and retailers."
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by John Golden. To subscribe to ESM: The European Supermarket Magazine, click here.