Fewer smokers, but more illegal cigarettes: the black market in the EU exceeds 10 per cent

Brussels – EU citizens are smoking fewer cigarettes, but buying more on the “black market”. In 2025, consumption fell by 4 per cent, the sharpest annual decline since 2021, and sales dropped by 5 per cent. At the same time, however, 42 billion cigarettes from the illicit trade were consumed, accounting for 10 per cent of total consumption and 7 per cent more than in 2024. This is according to data collected by KPMG in the report “Illicit cigarette and heated tobacco consumption, and oral nicotine share in Europe”, presented today (3 June) and commissioned by Philip Morris International, a US company operating in the tobacco industry. 

This is not a sudden phenomenon. In fact, over the past twenty years, legal cigarette consumption in the EU has fallen by 44 per cent, but the share of counterfeit products has risen from less than 1 per cent to over 5 per cent of total consumption. Estimated tax losses for 2025 are around €16.7 billion. Across 38 European countries analysed, the phenomenon involved 55.3 billion illegal cigarettes. The illicit market is undergoing a structural transformation: counterfeit products now account for 44 per cent of the illicit market, up over 20 per cent from the previous year. The centre of gravity of the phenomenon, the report explains, has shifted from Eastern Europe towards the major markets of Western Europe—France, Belgium, and the Netherlands—where domestic cigarette production is fuelling increasingly fragmented, difficult-to-trace criminal networks. According to interviews conducted by KPMG with 18 police agencies across the European Union, large shipments are giving way to smaller, more frequent consignments, delivered via air couriers, postal parcels, and even drones. Sales are increasingly taking place via social media and messaging apps, bypassing traditional retail channels and making it harder to trace the supply chain. 

France remains the continent’s largest illicit market, with 20.5 billion illegal cigarettes consumed and an illicit market share of 41.4 per cent. Six Member States (France, Ireland, Belgium, Cyprus, the Netherlands, and Lithuania) already exceed the 20 per cent threshold.

 “When there are too many restrictions, illegal activity increases immediately, and there is no systematic response from the EU to tackle unofficial trafficking.” Stefano Betti, deputy director general of TRACIT (Transnational Alliance to Combat Illicit Trade), explained the increase revealed by the data in this way. Later, speaking to Eunews, he reiterated his position: “If one wishes to adopt firm, prohibitive, and restrictive regulations, one cannot be surprised by the emergence of a parallel illicit market for those products.” 

The tobacco industry has long opposed restrictions and increases in excise duties, precisely by highlighting the link to the illicit market. The debate on this issue is ongoing and is not new to the European Union. In April Hana Ross, a research associate at the University of Vienna and an expert on tobacco taxation, presented a study on excise duties alongside economist Kristijan Fidanovski before the Committee on Tax Affairs of the European Parliament. “The only annual estimates of illicit rates currently available to us are funded and commissioned by the tobacco industry. And we know that their methodology is not transparent. They have an interest in exaggerating the illegal trade, especially in countries with tobacco tax policies,” Ross stated. On that occasion, Renew MEP Gilles Boyer had pointed out that “the illicit market argument can no longer be used to curb tax increases,” because this is a matter of “public health.” 

The report produced by KPMG “follows a very specific and rigorous methodology,” Stefano Betti replied today. “The tobacco industry,” he continued, “is a key stakeholder in the sector and naturally has its own view of the issue and puts forward its own interpretation. It is wrong to say that the data, coming from this industry, conceal a mere financial interest.” According to Betti, “the tobacco industry’s perspective should be seriously considered and incorporated into policymakers’ deliberations, especially since many of the measures taken so far to combat this phenomenon have not yielded the desired results.” 

The problem, Betti explained, is not only “at the EU level, but also at the Member States level. There is a tendency to overlook the fact that certain particularly restrictive regulations have a knock-on effect on other sectors, for example on the creation of parallel legal markets.” The result is that “we focus exclusively on the need to protect public health, forgetting the other side of the equation.” What is needed, therefore, is “a serious decision-making process involving a wider range of stakeholders. We need the intellectual honesty to change our position,” added Betti, “to rethink certain models.” Once “certain regulations have been adopted,” he continued, “they inevitably create a space for criminal structures, which are difficult to eradicate even when the regulations are repealed.” 

An integrated approach is needed to dismantle illicit market flows and criminal organisations. For this reason, Betti told Eunews, “TRACIT does not focus solely on one or two specific sectors, but seeks to identify the problematic aspects common to all forms of illicit trafficking.” Thus, “we have been able to show that in many cases the same criminal group traffics in different types of goods, and that the same trade routes and the same networks of public officials—who are bribed to get the goods through customs—are used for various types of illicit trafficking.” The idea, therefore, is “to tackle the issue of illicit trafficking holistically, identifying common features and taking action to reduce risk across all sectors through a common policy.” 

The issue is more relevant than ever, given the revision of the European directive on tobacco taxation. The proposal was adopted by the Commission on 16 July 2025, but the road ahead remains challenging, with several countries having already expressed negative views. Finally, a public consultation on the revision of the Tobacco Products Directive has been open since 3 June and will run until 14 August.