A new study by KPMG has revealed alarming levels of illicit cigarettes in the EU, with France accounting for almost half of the consumption, according to a PMI press release.

Philip Morris International Inc. commissioned the 2022 KPMG annual study on illicit cigarette consumption in the EU, U.K., Norway, Switzerland, Moldova and Ukraine which showed that 35.8 billion illicit cigarettes were consumed across the EU. This means an estimated loss of EUR 11.3 billion in tax revenue which is 8.5 per cent more than in 2021. According to the PMI press release, the growth of the illicit market in the EU was partly driven by the continued rise of counterfeit consumption, which reached its highest level ever recorded with the vast majority of counterfeits (61.5 per cent) consumed in France.
The study showed that criminal organizations are focussing their activities on higher-taxed and higher-priced EU member states with countries such as Belgium, Denmark, France, and Germany witnessing a growth in cigarette seizures and raids on clandestine manufacturing operations.
“The KPMG report clearly shows how the growth of the illicit cigarette market poses an existential threat to the industry’s sustainability and transformation in Europe. We can observe how the illicit cigarette problem in the EU has become highly concentrated in a handful of countries, where governments have not embraced innovative approaches to effectively deter millions from continued smoking,” said Gregoire Verdeaux, senior vice president of External Affairs, PMI. “Traditional tobacco control policies are simply not enough. Aggressive fiscal policies, prohibitionist approaches, and lack of deterrence in countries like France and Belgium are only benefitting criminals and pushing adult smokers toward the black market.”
The KPMG study also shows that the majority of EU members— 21 out of 27 countries—experienced a stable or declining share of illicit cigarette consumption in 2022. According to PMI’s press release, excluding France, overall illicit consumption in the remaining markets in the study declined by 7.5 per cent, largely due to decreases in Greece, the Netherlands, Portugal, and Romania. Particularly, in countries like Poland and Romania, illicit consumption reached the lowest-ever incidence since KPMG began publishing its annual studies.