A new report from global consultancy KPMG has revealed a sharp rise in illicit cigarette consumption across the European Union, with France and the Netherlands emerging as epicentres of the surge.

According to the 2024 KPMG study, smokers in the European Union consumed 38.9 billion illicit cigarettes in 2024, marking a 10.8% increase versus 2023.

That is the highest level recorded since 2015. That number accounts for 9.2% of total cigarette consumption, with governments losing as much as €14.9 billion in tax revenues at a time when many countries face intense economic pressures and rising black markets. Of particular concern are France and the Netherlands, where unregulated consumption has skyrocketed.

France alone accounted for 18.7 billion illicit cigarettes in 2024, amounting to a staggering 37.6% of its total tobacco consumption—making it the single largest illicit market in Europe.

The Netherlands experienced the steepest rise, with illicit consumption doubling to 17.9% of the national total—a 10.2 percentage point year-on-year jump.Belgium, while not suffering increases on the same scale, remains highly vulnerable due to its strategic geographic location, acting as a hub for cross-border smuggling between low-tax and high-tax jurisdictions.

In contrast, countries that firmly oppose high taxation, like Italy and Romania, recorded relatively low illicit consumption rates of 2% and 6%, respectively. Also Greece had a significant drop in illicit cigarette consumption in 2024, to 17.5%—the largest decrease the country has seen in a decade.

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A Wake-Up Call for Policymakers

The rise in illicit tobacco is not only a public health concern but a significant economic and security threat. KPMG estimates that €19.4 billion in tax revenues were lost across Europe in 2024 due to the black market. These funds could have supported healthcare systems, law enforcement, and social programs, particularly critical as the continent faces rising geopolitical instability.

According to Christos Harpantidis, PMI’s Senior Vice President for External Affairs, “illicit tobacco trade is a growing and multifaceted threat for Europe. It undermines public health by pushing consumers toward unregulated and inferior products, fuels organised crime and deprives governments of critical revenues. In 2024, 38.9 billion illicit cigarettes were consumed in the EU – nearly one in every 10 cigarettes consumed in the EU was illicit, as per the 2024 KPMG report on illicit cigarette consumption in Europe. “

‘The illicit cigarette consumption in the EU was primarily driven by France and the Netherlands, both countries with excessive taxation, highly vulnerable to the illicit trade phenomenon.  The Netherlands saw the steepest rise, with estimated tax losses tripling to nearly €900 million. France remains the largest illicit market, with 18.7 billion illicit cigarettes consumed,” he said.

The increasing phenomenon across almost all EU member states was also confirmed by Europol in their 2025 report on Serious and Organized Crime Threat and Assessment, where among the main factors driving illicit tobacco trade in Europe “high and rising excise duties and taxes” were listed. 

“On the other hand, countries such as Greece, Bulgaria, and Italy have demonstrated that balanced, evidence-based regulation and predictable taxation can reverse this trend. Greece, for example, achieved the largest decline in illicit cigarette consumption in the EU in 2024, thanks to a coordinated approach combining evidence-based policy, strong law enforcement, and public-private collaboration in the fight against illicit trade. Outside of the EU, Ukraine achieved a 29% drop in illicit volumes, showing that predictable taxation and strong law enforcement can bring results in adverse circumstances.” 

“Europe is bleeding value through policies that simply aren’t working. Illicit tobacco trade is a growing threat to the EU’s economy, public health, and security. The EU can either continue down a path that inadvertently fuels illicit trade or embrace a smarter, data-driven strategy that protects consumers, strengthens public finances, and supports innovation and growth,” he added.

Drivers: Excessive taxation and enforcement gaps

The 2024 KPMG study, produced annually and commissioned by Philip Morris International (PMI), suggests that excessive taxation and overly restrictive tobacco control policies are key enablers of the illicit market. PMI argues that sudden tax hikes and complex regulations provide fertile ground for organized crime syndicates, which exploit consumer demand for cheaper alternatives.

While public health advocates argue that higher taxes reduce smoking rates, PMI insists that steep, unpredictable tax increases create a vacuum quickly filled by criminal networks distributing untaxed and potentially dangerous counterfeit products.

Criminal innovation on the rise

Modern smuggling operations have become more agile and tech-savvy. Gangs now deploy drones, use rail and budget airlines for micro-shipping, and even advertise on encrypted social media channels. As production has moved closer to end markets, detection has become harder.

David Fraser of KPMG remarked, “This is the first time we’ve seen double-digit illicit cigarette consumption Europe-wide—10% of total consumption. If left unchecked, this crisis will continue to erode Europe’s fiscal and regulatory frameworks.”

Belgium: A critical crossroads

Although Belgium’s numbers are less dire than France or the Netherlands, its role as a transit country makes it a key battleground in the fight against illicit trade. Criminal networks use Belgium’s central position within the EU to move goods rapidly, taking advantage of differing national tax regimes and limited coordinated enforcement.

The KPMG study also mentions positive examples: Bulgaria, Greece, Italy, and Portugal, as well as Ukraine, which is not a member of the EU, have made significant progress in reducing the illicit tobacco market. For example, in Greece, in 2024, illicit cigarette consumption decreased by 6.2 per cent. This is the largest decrease in a decade. According to experts, this was due to predictable tax regimes and strong support for local law enforcement agencies.

The opinion of the experts

EU Reporter asked the opinion of two global top experts in public health and prevention. This is what they have to say :

Dr. Constantin Farsalinos, Researcher, University of Patras and University of West Attica, Greece.

“From a public health standpoint, significant and consistent taxation on tobacco products is one of the single most effective tools for reducing overall consumption and preventing initiation. However, a balanced approach is necessary in order to avoid criminal activities and the establishment of an illicit market, which could have the exact opposite effect: increase accessibility and affordability for tobacco cigarettes, effectively cancelling this important measure”, he said.

 “For public health, the goal is clear: we need to urgently eliminate smoking. In that respect, tobacco control efforts should include, but not only be confined to, a carefully planned but significant taxation scheme and enhanced efforts to eliminate illicit trade not only of counterfeit products but also of legally manufactured products smuggled to avoid taxes.”

“These measures should be complemented with enhanced efforts to provide effective smoking cessation services and increased accessibility and affordability of tobacco harm reduction products. A comprehensive and multimodal approach is needed to make smoking history”, he added.

Clive Bates, former Director of Action on Smoking and Health (UK), campaigning to reduce the harms caused by tobacco.

"The only way to sustain and justify high taxes on cigarettes is to have easy and affordable access to safer alternative forms of nicotine. Otherwise, these taxes are brutally punitive for people who continue to smoke. As taxes go up, smokers will be driven to seek illicit tobacco, but it would be far better if they were encouraged to migrate to cheaper, safer, and legal alternatives instead. Getting those incentives right could turn tobacco tax policy from a looming failure into an impressive success."

Conclusion

The surge in illicit cigarette consumption in France, the Netherlands, and Belgium should be a wake-up call for EU institutions and national governments alike. Only through balanced taxation, evidence-based regulation, and enhanced enforcement cooperation can Europe stem the tide of criminal profiteering and reclaim billions in lost revenue at a time when every euro counts.

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