Unauthorized sale of 1.7 billion packs of cigarettes on the black market
Revamped Report:
Secrets of Germany's Black Market Cigarette Boom
It seems that the shadows of Germany's black market are cast even wider, as the consumption of clandestine and smuggled cigarettes nudged up in 2024, according to Philip Morris International, the creators of Marlboro. A study by consulting firm KPMG, commissioned by the company, hints that 1.7 billion sneaky smokes were hawked on the black market last year, accounting for 2.2% of the nation's total cigarette consumption. This figure stood at 1.6 billion in 2023 and around 3.7 billion in 2020.
Almost Half in the Shadows
Almost half of the illicit smokes sold in Germany were shady goods (45.7%), with the rest being either phony cigarettes (26.8%) or so-called "Illicit Whites" - smokes that are legally produced but illicitly imported into Germany (27.5%).
Digging through Trash to Expose the Underbelly
The KPMG report, presented in Brussels, involved data collection on illegal tobacco trading in 38 European countries. By raking through trash bags and collecting discarded packs, investigators probed whether they were legitimately sold products. Over 500,000 packs were scoured.
One in Ten Hides in the Shadows
According to the report, every tenth cigarette smoked in the countries studied originated from the shadows, totaling 52.2 billion pieces. The situation is particularly fraught in France, where more than every third cigarette is a product of the black market.
Germany: A Key Player in This Grim Game
Germany holds a crucial position in this sordid dance. Recently, authorities seized 32 million untaxed counterfeit cigarettes in a raid on an unlawful cigarette factory in Düsseldorf, a place reportedly resupplied weekly with raw tobacco and other materials.
A Staggering 400 Million Euros Down the Drain
"Germany is shaping up to be a strategically significant production and distribution hub for organized crime and the supply of these markets," a statement from Philip Morris Germany read. The authors estimate that the illicit trade in cigarettes in Germany alone accounted for a hefty tax loss of around 401 million euros last year.
Shedding Light on the European Scene
Recent studies paint a vivid picture of the current state of black market tobacco sales sprawling across Europe, including Germany, though specific data for Germany is often peppered within broader regional statistics.
Rising Illicit Consumption in the EU
- A Spiraling Trend: In 2024, EU smokers consumed 38.9 billion illicit cigarettes, marking a soaring 10.8% surge compared to 2023 and the highest level since 2015. This equates to 9.2% of the total cigarette consumption in the region.
- The Push Factors: Steep tax hikes, excessive tobacco control policies, and steep prices are fingered as key drivers nudging consumers towards the clandestine market.
- Clever Smuggling Tactics: Criminal groups are increasingly employing drones and social media platforms to channel illicit cigarettes, making it tricky to nab them using traditional law enforcement methods.
Country-Specific Trends
- France: Currently leads the EU with the largest illicit market, where a whopping 37.6% of all cigarettes consumed are clandestine.
- Germany: While precise country-level data for "percentage of smuggled, counterfeit, and illicit white (non-duty paid) cigarettes" in Germany is not explicitly disclosed in the latest statistics, the broader EU trend and focus on high-priced Western European countries make it clear that Germany experiences a sizeable black market.
- Other EU Countries: Some nations, such as Bulgaria, Greece, Italy, Portugal, and Ukraine (outside the EU), have observed a drop in illicit cigarette consumption in 2024.
Breakdown of Illicit Tobacco Types
- Defining the Miscreants: "Illicit cigarettes" encompass smuggled (legitimate products moved illegally across borders), counterfeit (fake products), and "illicit whites" (non-duty paid brands produced specifically for illicit markets).
- Europe-wide Share: The 9.2% of total cigarette consumption in the EU is laid at the feet of these nefarious categories combined.
- Geographical Disparities: The illicit market share varies dramatically depending on the country. In France, it outstrips the EU average, while some Eastern European countries have been witnessing a decrease in illicit cigarette consumption.
Impact: A Double Whammy of Tax Revenue Loss and Broader Consequences
- Taxation Troubles: The resurgence of illicit cigarette consumption bears a significant impact on tax revenues. Losing so many cigarettes outside the legal market equates to substantial tax income disappearing.
- Wider Ramifications: The growth of the black market is intertwined with a rise in crime rates and missed opportunities for public health regulation, as illicit products often lack regulation and are inferior in quality.
- Policy Pitfalls: The European Commission and national governments are mulling over or enforcing higher excise taxes and stricter regulations, though research suggests that excessive taxation may escalate the issue by driving more consumers toward the black market.
- The KPMG report, mentioning the illicit cigarette trade in 38 European countries, also highlighted entertainment venues as hotspots for black market cigarette sales due to their popularity and easy access.
- Despite Germany's efforts to combat the black market cigarette boom, the rising illicit consumption in the EU presents a challenge for both the government's tax revenue and public health regulations, making these clandestine goods, in essence, an unauthorized form of entertainment for some consumers.
