The share of illegal cigarettes in the total consumption has increased by 3.1 percentage points to 21.2 per cent in 2022 in the UK, driven by an increase in counterfeit cigarettes, a new study has revealed.
According to the 2022 KPMG annual study on illicit cigarette consumption in the EU, UK, Norway, Switzerland, Moldova and Ukraine, commissioned by Philip Morris Products SA, counterfeit consumption increased to 3.61 billion in 2022, the highest volume recorded in the UK since the beginning of this study.
The total number illegal cigarettes, including contraband and illicit whites, consumed in 2022 stood at 5.9 billion, an increase of over 9 per cent, or 500 million. However, the cigarette consumption declined by 8 per cent to 27.8 billion, continuing its long-term declining trend. The study noted that this was driven by a decline in legal domestic consumption.
Total tax revenue lost from the illegal trade climbed by £417 million to £2.78 billion.
In the EU, the KPMG study has revealed alarming levels of illicit cigarettes, with France accounting for almost half of the consumption.
The study has found that 35.8 billion illicit cigarettes were consumed across the EU alone, causing governments the loss of an estimated €11.3 billion in tax revenue, 8.5 per cent more than in 2021.
Philip Morris International (PMI) has called for a reassessment of policy choices that may be contributing to the year-over-year growth of the illicit market in the region and for innovative approaches that can help drive millions away from continued smoking to be considered.
“Some countries unwilling to embrace innovation and make better alternatives to cigarettes available to adult smokers who would otherwise continue smoking continue to rely on policies that have contributed to the current state of illicit trade. The cost of ignoring the negative impact of illicit cigarettes on adult smokers, and on public health, is too high to turn a blind eye to,” said Gregoire Verdeaux, senior vice president of External Affairs, PMI.
“It has truly become a ‘made in the EU’ problem, as fake cigarettes are being manufactured, distributed, sold, and consumed in countries within the EU, undermining efforts to reduce and eliminate cigarette smoking—and public health goals altogether.”
Despite the overall illicit consumption increase, the KPMG study notes that the majority of EU members— 21 out of 27 countries—experienced a stable or declining share of illicit cigarette consumption in 2022. 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.
The 2022 findings placed Ukraine as the second-largest market in Europe for illicit cigarette consumption, with 7.4 billion cigarettes, behind France’s 16.9 billion. The third-largest illicit market in Europe is the UK, with 5.9 billion illicit cigarettes, on the rise since 2020.
“In these times of economic hardship, with inflation putting extra pressure on consumer purchasing power, we need robust law enforcement, comprehensive regulatory approaches and forward-thinking policies that can help improve the lives of millions of adults who continue to smoke,” noted Verdeaux.
“This includes the adoption of differentiated policies on alternatives to cigarettes, including access to information about better alternatives, and smoke-free products that are available and affordable for all. No one should be left behind.”