Counterfeit Cigarettes Dominate Illicit Trade

In 2025, illicit cigarettes accounted for 10.3% of total consumption in the European Union. This was the first time since 2014 that the market surpassed the 10% threshold. Counterfeit cigarettes are the main drivers of this increase, forming the largest segment of illicit trade.

A study by KPMG LLP for Philip Morris Products S.A. Showed that counterfeit cigarettes made up 44% of the EU’s illicit consumption, translating to 18.3 billion cigarettes. This shift has largely replaced traditional East-to-West contraband flows.

Among Western European countries, France, Belgium, and the Netherlands experienced the highest illicit consumption levels. In France alone, nearly 10 billion counterfeit cigarettes were consumed, representing 41.4% of the illicit market.

Impact on EU Economies

The EU lost an estimated €16.7 billion in tax revenues due to illicit cigarette consumption in 2025. Across 38 European countries, illicit consumption reached 55.3 billion cigarettes, causing €22.4 billion in lost state budget revenues.

Christos Harpantidis, Group Chief Corporate Affairs Officer at Philip Morris International, stressed the need for a coordinated response. “The data is clear: counterfeits have become the primary engine of the illicit cigarette market in the EU,” he stated, emphasising the importance of stronger law enforcement and public-private cooperation.

Countries such as Greece and Ukraine have demonstrated that a balanced policy mix can reduce illicit trade. Greece saw a 14.1% illicit share, down by 3.4 percentage points year-on-year. Ukraine reported a reduction of nearly 1 billion cigarettes in illicit volumes, despite challenging circumstances.

The study also examined illicit heated tobacco products, finding that contraband represented a smaller share of total consumption compared to cigarettes. Germany, Austria, and the Netherlands were significantly affected by heated tobacco contraband. However, no counterfeit heated tobacco flows were identified.

Efforts to combat illicit trade include strengthening supply chain controls and enhancing cooperation with law enforcement agencies. Philip Morris International continues to advocate for evidence-based regulation to address the growing issue of counterfeit and contraband cigarettes in Europe.

Last updated: 29 June 2026, 11:54 am