A new EU-wide study shows illicit cigarette consumption rose over 7% year-on-year in 2025, with counterfeit products becoming a major driver of the black market.

The report, based on KPMG research for Philip Morris Products S.A., finds illicit cigarettes in the EU reached 41.8 billion units (10.3% of total consumption for the first time since 2014), leading to an estimated €16.7 billion in lost tax revenue. Across 38 European countries, the total reached 55.3 billion cigarettes, costing governments about €22.4 billion.

A key shift highlighted in the study is the rise of “made in EU” counterfeit cigarettes, which now account for 18.3 billion units, or 44% of illicit consumption. These products are increasingly produced closer to end markets in Western Europe, making supply chains harder to detect and disrupting traditional smuggling routes.

Western Europe is most affected, with France, Belgium, and the Netherlands seeing particularly high levels. France remains the largest illicit market, with 41.4% of consumption illicit and nearly 9.7 billion counterfeit cigarettes. Belgium and the Netherlands also recorded significant shares above 20%.

The study notes mixed results across Europe: some countries have reduced illicit trade through balanced taxation and enforcement, while others continue to see growth. Greece and Ukraine recorded notable declines in 2025.

Overall, the report warns that illicit tobacco trade is becoming more localised and sophisticated, driven by organised criminal networks and rapid adaptation to enforcement efforts. It argues that coordinated regulation, stronger enforcement, and public-private cooperation are needed to curb the trend.

The report also finds limited illicit activity in heated tobacco products and growing concern about non-compliant oral nicotine products in markets where regulation is strict or bans exist.