35 billion illicit cigarettes consumed in the EU: data from a KPMG report compiled for Philip Morris International

Brussels – “Illegal consumption has grown for the fifth consecutive year in Europe, reaching 35.2 billion illegal cigarettes consumed in the EU,” according to KPMG’s Report on Illegal Cigarette Consumption in Europe compiled for Philip Morris International (PMI). This number represents 8.3 percent of total cigarette consumption in 2023, 0.1 percent higher than the previous year.

Christos Harpantidis, PMI Senior Vice President for External Affairs, presented the findings in a press conference. According to the study, EU governments lost some 11.6 billion euros in tax revenue overall. It is not just a question of impact on the economy, as counterfeit cigarettes go unchecked and are risky for public health, and the revenue goes to illicit activities.

The situation within the EU shows clear differences. Countries such as Italy, Poland, and Romania performed well in combating the illicit cigarette market, with decreasing rates since 2019, and, in contrast, France has the highest value, 33 percent.

It is evident that “countries must take concrete action,” Harpantidis notes, as the phenomenon is a direct consequence of ineffective policy approaches. A comprehensive line of action is needed to succeed in combating this trade, combining greater coordination among law enforcement agencies to dismantle the cross-border smuggling network, increasing related penalties, and raising public awareness about the risks of consumption.

In this context, Italy confirms it is an example of best practice, with an illicit consumption rate of less than 2 percent. Luigi Scordamaglia, chief executive officer of Filiera Italia, explains the effectiveness of this approach.

Italy uses the end-to-end value chain model, unifying the departments of the internal organization. Concretely, this means greater integration, increased security, traceability, and efficiency in a trilogue between public, private, and law enforcement.

“The first ingredient is a full integration of the supply chain, bringing together farmers, those who produce, such as Philipp Morris, and those who sell, such as the Italian Tobacco Federation, ensuring that each has its margin and sharing values and rules to be respected,” Scordamaglia said. Investments are needed to make the model a reality: around 500 million for 2021-2027 for the Italian tobacco supply chain, in an agreement involving Coldiretti, Philipp Morris International, and the Ministry of Agriculture and Food Sovereignty.

In addition, the Italian process uses the MACISTE (Monitor Agromafie Contrast Illicit Tobacco and E-cig Sectors) Working Table to permanently monitor the illicit phenomenon, providing significant tools to law enforcement.
The EU needs coordinated and efficient work to prevent the illicit tobacco trafficking problem from spreading. It could export the Italian model to achieve effective results.