Philip Morris International: New Study Shows Decline of Total Illicit Cigarette Consumption in the European Union in 2019 Des...
June 18 2020 - 7:05AM
Business Wire
PMI calls for sustained anti-illicit trade
efforts and collaboration with law enforcement.
Philip Morris International Inc. (PMI) (NYSE: PMI) reiterated
today the need for collaborative efforts against illicit trade to
continue, as a new report produced by KPMG underlined the changing
nature of the problem in the European Union (EU).
The independent KPMG annual study, commissioned by PMI, found
that in 2019, the consumption of illicit cigarettes—which consist
of contraband, counterfeit, and illicit whites—continued to decline
in the EU, reaching an all-time low since the study first took
place in 2006. In total, 38.9 billion illicit cigarettes were
consumed, representing 7.9 percent of total cigarette consumption,
a 0.7 percentage point reduction compared to the previous year.
Despite the overall decline of illicit cigarette consumption,
which continued for the seventh consecutive year, the consumption
of counterfeit cigarettes continued to grow, reaching 7.6 billion,
a 38.3 percent increase compared to 2018 and the highest level
recorded to date.
“The continued decline of illicit tobacco trade in the EU is a
positive development and reinforces the importance of supply chain
control measures, strict enforcement, and collaboration in
combating this issue,” said Alvise Giustiniani, vice president of
Illicit Trade Prevention at PMI. “We must remain focused on these
collective efforts, as there continue to be worrying trends like
the increase of counterfeit cigarettes and the persisting problem
of illicit whites. The first ever EU-wide tracking and tracing
system that was introduced last year under the European Tobacco
Products Directive is an important tool for law enforcement and one
that we should continue to enhance through close collaboration and
information-sharing to remain highly vigilant on emerging
risks.”
Illicit trade undermines efforts to reduce smoking prevalence
and makes unregulated tobacco products easily accessible. For PMI
to deliver a smoke-free future and enable millions of people who
would otherwise continue to smoke to switch to better alternatives
to cigarettes, it’s essential to eliminate illicit tobacco trade
wherever it exists.
Interviews with law enforcement conducted by KPMG as part of the
study indicate that the manufacture of illicit whites and
counterfeit cigarettes in illegal factories located in the EU is
increasing. Insights from law enforcement also refer to emerging
organized crime groups that specialize in the smuggling and sale of
illicit raw tobacco.
Other report findings reveal that:
- Counterfeit cigarettes represent 19.5 percent of total illicit
cigarette consumption. Compared to 2018, the biggest increases in
counterfeit consumption occurred in the U.K. (by 137 percent, to
2.1 billion cigarettes) and France (by 82 percent, to 0.84 billion
cigarettes).
- Illicit whites continue to be a major element of illicit
cigarette consumption, representing 35.6 percent of illicit
consumption in the EU, or 13.8 billion cigarettes, up from 29.8
percent in 2018.
- For the first time since the research began in 2006,
counterfeit cigarettes and illicit whites represent more than 50
percent of total illicit cigarette consumption in the EU.
- The countries with the largest volumes of illicit cigarette
consumption in the EU were France, with 7.2 billion illicit
cigarettes, and the U.K., with 5.5 billion illicit cigarettes.
- The highest shares of illicit cigarette consumption were found
in Greece (22.4 percent), Lithuania (17.7 percent), and Ireland
(17.5 percent). Compared to 2018, both Greece and Ireland saw a
declining trend in illicit cigarette consumption, while Lithuania
marked a slight increase.
- Illicit flows from identifiable markets outside the EU, such
as Ukraine and Belarus, continued to decline. However, illicit
products reportedly originated from within the EU—and destined to
another EU country—increased in 2019.
PMI invests significantly in supply chain controls through
preventive and protective measures, implements track-and-trace
solutions worldwide in line with strict regulatory requirements,
and applies comprehensive due diligence of customers and suppliers.
The company supports regulations such as the FCTC Protocol to
Eliminate Illicit Trade in Tobacco Products and the tracking and
tracing provisions under the EU Tobacco Products Directive.
Furthermore, PMI works with private and public actors alike to help
advance the global anti-illicit trade efforts, including through
PMI IMPACT, a global initiative supporting third-party projects
against illegal trade and related crimes.
For more information about PMI’s illicit trade prevention
efforts, visit StopIllegal.com.
About KPMG’s Report
A detailed overview of results and methodology is available
here.
Philip Morris International: Delivering a Smoke-Free
Future Philip Morris International (PMI) is leading a
transformation in the tobacco industry to create a smoke-free
future and ultimately replace cigarettes with smoke-free products
to the benefit of adults who would otherwise continue to smoke,
society, the company, and its shareholders. PMI is a leading
international tobacco company engaged in the manufacture and sale
of cigarettes, as well as smoke-free products and associated
electronic devices and accessories, and other nicotine-containing
products in markets outside the United States. In addition, PMI
ships a version of its IQOS Platform 1 device and its consumables
authorized by the U.S. Food and Drug Administration to Altria
Group, Inc. for sale in the United States under license. PMI is
building a future on a new category of smoke-free products that,
while not risk-free, are a much better choice than continuing to
smoke. Through multidisciplinary capabilities in product
development, state-of-the-art facilities, and scientific
substantiation, PMI aims to ensure that its smoke-free products
meet adult consumer preferences and rigorous regulatory
requirements. PMI’s smoke-free IQOS product portfolio includes
heat-not-burn and nicotine-containing vapor products. As of March
31, 2020, PMI estimates that approximately 10.6 million adult
smokers around the world have already stopped smoking and switched
to PMI’s heat-not-burn product, available for sale in 53 markets in
key cities or nationwide under the IQOS brand. For more
information, please visit www.pmi.com and www.pmiscience.com.
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Martin Schatzky Philip Morris International T. +41 (0)58 242
4500 E. Martin.Schatzky@pmi.com
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