Illegal Cigarette Trade in EU Peaked in 2010

Philip Morris International Inc. last week disclosed the results of its latest demonstrating that illegal sales of contraband and fake tobacco products across European Union reached record level in 2010 since the company began studying the market in 2006.

The research, performed by KPMG, assessed that yearly consumption of illegal cigarettes grew by 3.1 billion sticks in 2010 as compared to 2009 to an aggregate of 64.2 billion units, representing nearly 10% of overall cigarette consumption across European Union. According to the information provided by European Anti-Fraud Office, the EU and national economies missed 10 billion Euros in taxes in 2010 due to the growth in illegal sales.

Illegal Cigarettes in EU

KPMG has carried out similar researches annually as part of the landmark collaboration convention between Philip Morris International, The EU member-nations and the European Commission. The analysis and its main conclusions will be taken into consideration by European Anti-Fraud Office and national governments.

Speaking about the results of the study, Timothy Lindon, Chief Compliance Officer for the PMI, declared that whereas it has been evident that law enforcement authorities across the EU have been doing their best to eliminate the issue, the study shows that illegal cigarette trade has been on the rise and presents a great challenge for the EU member-states.

“The illegal cigarette trade throughout the EU is currently bigger than legitimate combined cigarette markets of France, Switzerland and Finland, and contributes to growing criminality in EU member nations, since revenues from illegal tobacco trade are regularly allocated to fund other illicit activities, such drug trafficking, human smuggling and terrorist attacks. In many EU member states, there are currently two different tobacco markets, one legitimate market which is decreasing, and an illicit unregulated cigarette market which is increasing.”

Philip Morris International is strongly against the illegal cigarette trade and has performed a wide series of actions to eliminate this rising issue, including introduction of a worldwide tracing system, all-round know-your-customer measures, customer education and cooperation with national governments. The solution to this problem is the cooperation on both national and international levels, among multiple parties, such as enforcement bodies, governments, cigarette companies, wholesales and retailers, as well as strict and globally-enforced convention on illegal cigarette markets that combats all forms of smuggling and counterfeiting of tobacco products.

Philip Morris International is the number one international tobacco corporation, which manufactures seven of the world’s best-selling 15 global cigarette brands, including Marlboro, the top-selling cigarette brand in the world. PMI’s brands are available in almost 180 markets. In 2010, the tobacco giant accounted for approximately 16.0% share of the entire global cigarette market, excluding the United States, and 27.6% excepting the U.S. and China.

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