A new analysis of the scale of the illegal cigarette trade in the European Union shows that in 2025, consumption of cigarettes from the black market increased by more than 7% compared with a year earlier, reaching the highest level of the past decade and reinforcing the weight of this phenomenon in member states.
According to the study prepared by KPMG LLP on behalf of Philip Morris Products S.A., for the first time since 2014, more than one in ten cigarettes consumed in the EU belong to the illegal market. In 2025, this volume reached 41.8 billion cigarettes, or 10.3% of total consumption, while estimated losses in tax revenues amount to 16.7 billion euros. This is the first return above the 10% threshold since 2014.
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The same data show that the trend is rising across Europe. In the 38 countries included in the study, illegal consumption was estimated at 55.3 billion cigarettes, with estimated losses for state budgets of 22.4 billion euros. The report stresses that the main share of this market consists of counterfeit cigarettes, which amount to 18.3 billion units, or 44% of total illegal consumption in the EU. Compared with 2024, the quantity of counterfeit cigarettes and tobacco products increased by more than 20%.
According to expert assessments, high levels of taxation and restrictive rules may push consumers toward the illegal market. At a conference on the illegal tobacco trade held in Brussels, Lithuania’s deputy border police commander, Donatas Shkarnulis, said better alignment of laws and administrative methods is needed to tackle this activity more effectively.
“We are doing a lot. However, as shown in the presentations, the production of counterfeits continues to grow over time. Our efforts to reduce this phenomenon are not always sufficient. Better harmonization of laws and administrative methods is needed to preserve our ability to deal with this problem,” Shkarnulis said.
Hristos Harpantidis, general manager for corporate affairs at Philip Morris, also underlined that the fight against illegal trade requires joint action, with stronger law enforcement, cooperation between the public and private sectors, as well as balanced regulations that are evidence-based and practical to implement.
The report singles out France, Belgium and the Netherlands as some of the EU countries where illegal consumption has increased under the impact of tougher regulatory policies. France remains the largest illegal cigarette market in Europe, where 41.4% of total consumption is illegal. In Belgium, this percentage is 24.8%, while in the Netherlands it reaches 22.1%.
On the other hand, the report also highlights cases where illegal trade has declined thanks to balanced policies that combine predictable fiscal approaches, proportional regulation and consistent enforcement. Greece, for example, records a 14.1% share for illegal trade, down from more than 20% in past years. Likewise, Ukraine has posted positive results, reducing illegal trade by almost 1 billion cigarettes despite the difficult security situation.
In Macedonia, the level of illegal cigarette consumption remains relatively low compared with many EU markets, but the clear expansion of its share of the market remains a concern.
The data show that illegal cigarettes account for about 3.6% of overall consumption, while compared with last year this share has increased by approximately 1.3 percentage points. This shows that the market is not remaining stable, but is expanding.
This increase is seen as an early signal of changes in the system. It suggests that illegal cigarettes are becoming more accessible or more attractive to consumers. Although the level remains moderate, the increase shows that pressure on the legal market is growing and that illegal supply is intensifying.
It is also emphasized that this analysis does not include illegal hand-rolled tobacco, which represents a separate and often even greater challenge in North Macedonia, at around 13% in total.
According to the assessment presented, such an increase is rarely linked only to local changes in consumption. Within the framework of KPMG’s analysis, increases are usually accompanied by stronger supply dynamics, implying that products are entering the market more easily and in larger quantities through broader regional flows. This indicates that the country is gradually shifting from a mainly destination market into a link in the movement and redistribution of illegal products in the region.
