Counterfeit Cigarettes Drive EU Illicit Market Above 10% for First Time Since 2014

Article content

Article content

Article content

STAMFORD, CT — A new study detailing the scale of the illicit cigarette trade in the European Union (EU) shows that consumption of black-market cigarettes rose more than 7% year-on-year in 2025, reaching levels not seen in over a decade, with counterfeit cigarettes playing an increasingly significant role across member states. Philip Morris International (PMI) (NYSE: PM) reiterates its call for a coordinated response to illicit trade in Europe, built on evidence-based regulation and strengthened cooperation.

Article content

Article content

Article content

According to the 20^th edition of the study “Illicit cigarette and heated tobacco consumption, and oral nicotine share in Europe”, which was conducted by KPMG LLP on behalf of Philip Morris Products S.A., illicit cigarettes in the EU accounted for more than one in ten cigarettes for the first time since 2014. In 2025, illicit volumes reached 41.8 billion in the EU—representing 10.3% of total consumption—resulting in an estimated €16.7 billion in lost tax revenues.

Article content

Across the 38 European countries included in the study, illicit consumption reached 55.3 billion cigarettes, corresponding to an estimated €22.4 billion in state budget revenue losses.

Article content

A structural shift: from contraband flows to “closer-to-market” counterfeits

Article content

The illicit market is undergoing a fundamental transformation: “Made in EU” counterfeit cigarettes are increasingly displacing traditional East-to-West contraband flows. Supply chains are becoming faster and harder to trace, and operations are moving closer to end consumers – especially in Western European countries such as France, Belgium, and the Netherlands, which are becoming central hubs for illicit tobacco and nicotine products.

Article content

Counterfeits have become the largest source of illicit cigarettes in the EU, reaching 18.3 billion and accounting for 44% of total illicit consumption in 2025. Counterfeit volumes increased more than 20% year-on-year, highlighting organized crime’s ability to rapidly adapt production and distribution models to reduce detection risks.

Article content

“The data is clear: counterfeits have become the primary engine of the illicit cigarette market in the EU, supported by criminal supply chains designed to bring fake products to consumers in high-value markets, undermining the European economy and fueling broader illicit activity,” said Christos Harpantidis, Group Chief Corporate Affairs Officer, Philip Morris International. “It also underscores persistent structural vulnerabilities across regulation, enforcement, and judicial follow-through that create space for illicit trade to grow – at a time when many EU member states are under broader security and economic pressure, from inflation and competitiveness challenges to rising budget demands on security and defense due to geopolitical fragmentation. Closing these gaps in Europe requires coordinated action: stronger law enforcement, public-private cooperation and a focus on regulation that is balanced, evidence-based, and enforceable in practice,” Harpantidis added.

Article content

Article content

Article content

show that Europe’s tobacco and nicotine value chain supports over 2.1 million jobs and generates €224 billion in value – comparable to the EU’s 17th largest economy. With nearly €24 billion in annual exports, it is a significant industrial ecosystem, yet increasingly affected by illicit trade amid economic uncertainty and need for competitiveness in Europe. Addressing this requires pragmatic, evidence-based regulation and stronger cooperation, while supporting investment and innovation in Europe.

Article content

“Illicit trade is becoming more sophisticated, localized, and increasingly industrialized. It not only erodes legitimate business activity but also fuels criminal networks that operate with speed, scale, and impunity, discouraging investment, innovation and governments’ ability to deliver on public health and fiscal objectives,”

Article content

said Yann Guérin, Group Chief Legal Officer, Philip Morris International.

Article content

Western Europe at the forefront of this trend

Article content

Illicit consumption is increasingly concentrated in major Western European countries—most notably France, Belgium, and the Netherlands—amplifying fiscal pressures and enforcement challenges as illicit penetration rises.

Article content

Article content

More broadly, six EU member states now record illicit shares above 20%, underscoring the scale and concentration of the issue. Outside the EU, the United Kingdom remains the second-largest illicit cigarette country in the study, with volumes now surpassing 7 billion, including 3.5 billion counterfeit cigarettes.

Article content

What works: evidence-based policy, not extremes

Article content

Not all markets move in the same direction. Some countries have achieved sustained declines through a balanced policy mix combining predictable fiscal approaches, proportionate regulation, and consistent enforcement.

Article content