Nationwide consumption of counterfeit and contraband cigarettes remains at two-year peak level, according to the latest KPMG Report on Illicit Cigarette Consumption in Europe, commissioned by Philip Morris International (PMI).
According to the 2024 KPMG study released this week, illicit cigarette consumption in the UK has peaked over the past two years, showing that more than one in four cigarettes consumed was illicit.
This year’s report also shows the UK illicit market maintained its position as the third largest in Europe - by both volume and proportion of cigarettes consumed - despite falling in the bottom fifth in Europe for smoking prevalence. Illicit share of cigarette consumption remains markedly high in urban areas within London, the West Midlands, and the Northwest.
This continuation of high illicit cigarette consumption from 2023 highlights the resilience of the illegal market, Philip Morris Limited (PML), the UK and Ireland affilaite of PMI, noted. Nearly 26 per cent of all cigarettes consumed were illicit, equating to 5.9 billion cigarettes, which represents £3.15 billion in tax revenue lost from the government as a result.
The findings also shine a spotlight on the immediate risks faced by legitimate retailers, particularly those operating in the convenience and wholesale sectors. With 14 per cent fewer legal sales recorded last year, the viability of these stores is being hit hard by illicit activity, PML said.
“This report reinforces why our work with Trading Standards, enforcement agencies, and the retail community across the UK is so vital,” Catherine Goger, Illicit Trade Prevention Manager at PML, said.
“We recognise that this remains one of the most urgent threats to the livelihoods of convenience retailers in the UK and their communities, with consumers exposed to unregulated, potentially dangerous products from illicit sellers who show little regard for what they sell or to whom.
“We are using robust local intelligence, tracking illicit flows and driving action on the ground.”
PML has intensified its support in cracking down on illicit trade. Former Scotland Yard DCI and illicit trade prevention consultant Will O’Reilly said: “This year, PML has increased the number of undercover test purchases we carry out on their behalf. We’ve visited hundreds of stores across the UK to gather intelligence on, and evidence of, suspected illicit activity. The information captured from this is routinely shared with Trading Standards and enforcement agencies to aid prosecutions and disrupt the increasingly complex and industrialised illegal supply chain run by organised crime groups.”
The findings come as part of a broader analysis of illicit cigarette consumption in Europe. The KPMG study revealed that 38.9 billion illicit cigarettes were consumed in the EU in 2024, the highest level since 2015. This accounted for 9.2 per cent of total consumption and cost EU governments as much as €14.9 billion in lost tax revenues.
The report also found that the illicit consumption of heated tobacco products is beginning to surface across Europe, with the UK recording the highest proportion of contraband among ten countries surveyed.