In 2021, an estimated 1.3 billion more illicit
cigarettes were consumed in the European Union, reaching 8.1% of
total consumption in the region.
Philip Morris International Inc. (PMI) (NYSE: PM) is calling for
European regulators and policymakers to consider the millions of
adult smokers who are turning to the illicit market instead of
switching to better alternatives. The 2021 KPMG annual study on
illicit cigarette consumption, commissioned by PMI, reveals that
overall illicit cigarette consumption increased by an estimated
3.9%—or 1.3 billion cigarettes—last year, reaching 35.5 billion
cigarettes consumed across European Union (EU) member states.
Meanwhile, the study estimates that total EU cigarette consumption
declined over the same period.
Based on the report, the increase of illicit consumption in the
EU was largely driven by an estimated 33% increase in counterfeit
consumption in France, where it grew to 8.0 billion cigarettes last
year. Overall, France remains the largest market for illicit
cigarettes in the EU, with a total of 15.1 billion illicit
cigarettes consumed in 2021, comprising 29% of total cigarette
consumption in the country, which represents a significant growth
from 13% in 2017.
“The findings of the KPMG Report should be a real wake-up call.
It’s alarming that in countries that maintain high excise taxes on
cigarettes, such as France, instead of driving a decrease in
smoking prevalence, we see a rise in counterfeit cigarette
consumption. In fact, in France in the past five years, while the
average price of a pack of legitimate cigarettes has increased by
more than half, the number of adult smokers has only marginally
decreased,” said Gregoire Verdeaux, Senior Vice President, External
Affairs, PMI. “But there is also hope. Other EU countries have
adopted differentiated policies on alternatives to cigarettes that
support the continued decline of cigarette consumption while
reducing illicit trade, and they are already yielding encouraging
results. The European Commission in Brussels should make this the
foundation for the future.”
The annual KPMG report focuses on the consumption and flows of
illicit cigarettes in 30 European countries—the 27 EU member
states, as well as the United Kingdom, Norway, and Switzerland—and
indicates that had these cigarettes been legally purchased, an
additional €10.4 billion in taxes would have been collected by
governments in the EU.
“Tax revenue losses will limit governments’ ability to invest in
areas such as public safety, public services, or infrastructure, at
a time when people across Europe are also facing higher prices of
many basic goods. The risk that more adult smokers—especially those
among the lower-income population—turn to illicit trade is now
significant. This creates an even more urgent need to ensure that
smoke-free alternatives are available and affordable for all, to
enable them to make a better choice instead of buying from the
black market,” added Verdeaux.
The KPMG report also shows that roughly half—16 out of 27—of the
member states experienced declining or stable consumption of
illicit cigarettes in 2021. Among these countries, Poland saw one
of the largest declines in illicit volumes, showing a 3.7
percentage point decrease in its share of illicit cigarette
consumption.
“The decreasing consumption of illicit cigarettes in countries
like Poland is remarkable and reassuring. It showcases the impact
of effective law enforcement against criminals profiting from
illicit trade in a market where better alternatives to smoking are
available and more affordable to adult smokers. These are outcomes
other countries should aspire to emulate,” said Alvise Giustiniani,
Vice President, Illicit Trade Prevention. “It has never been more
important to provide in particular the most vulnerable in society
with access to information, as well as to develop and implement
innovative policies that truly include everyone and facilitate
access to better alternatives.”
Counterfeit consumption was the main driver of illicit trade in
the EU; consumption of fake cigarettes reached an estimated total
of 12.3 billion—accounting for 34.6% of total illicit consumption.
The study indicates that due to continued travel and border
restrictions related to the COVID-19 pandemic, organized criminal
groups shifted their focus toward manufacturing counterfeit
cigarettes directly within EU borders. Interviews conducted by KPMG
with seven different law enforcement agencies found that illegal
manufacturing sites are increasingly moving west in Europe to get
closer to higher-priced end markets, such as France and the
U.K.
The continued growth of a black market where fake and
unregulated cigarettes are easily available seriously undercuts
legitimate efforts to reduce and eventually eliminate cigarette
smoking.
“We are convinced that consumers need to be incentivized so that
they don’t have to turn to illicit cigarettes. This means focusing
on education and awareness, and ensuring the availability of better
alternatives, such as scientifically substantiated smoke-free
products,” added Verdeaux. “Making them accessible as a better
option for millions of adult smokers in Europe who don’t quit
should be our common top priority.”
A detailed overview of the results and methodology of the KPMG
report is available here. For more information about PMI’s illicit
trade prevention efforts, visit PMI.com.
Note to editors
In France, during the period 2017-2021, an average price of a
pack of legitimate cigarettes has increased by 50%, to over €10,
while the smoking prevalence has only marginally dropped by -1.4ppt
to the current level of 25.5% (Source: Journal official yearly
publication of WAP—2021 WAP; EU Commission Excise Duty Tables
yearly publication—2021; WAP 2005-2021; before 2004: price of most
sold brand in France. Santé Publique France, public agency of
Ministry of Health).
For PMI, eliminating the illicit tobacco trade has been a
long-standing priority. The company collaborates with law
enforcement agencies and other organizations all over the world to
root out and shut down illegal activities, including counterfeiting
and smuggling operations. PMI IMPACT is just one example of PMI’s
commitment in this sector—it supports third-party projects aimed at
reducing or preventing illegal trade. Ultimately, through PMI
IMPACT (now in its third round of funding), PMI is growing and
fostering an ecosystem of public and private actors to tackle
illegal trade in all its forms.
PMI’s efforts to fight illicit trade are embedded in its
day-to-day operations. The company implements preventive and
protective measures as a means of supply chain control, uses
cutting-edge track-and-trace technology, and holds all customers
and suppliers to strict due-diligence standards and protocols. PMI
continues to support relevant regulations like the FCTC Protocol to
Eliminate Illicit Trade in Tobacco Products and the EU Tobacco
Products Directives’ tracking-and-tracing provisions.
Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is a leading international
tobacco company working to deliver a smoke-free future and evolving
its portfolio for the long term to include products outside of the
tobacco and nicotine sector. The company’s current product
portfolio primarily consists of cigarettes and smoke-free products,
including heat-not-burn, vapor, and oral nicotine products, which
are sold in markets outside the U.S. Since 2008, PMI has invested
more than USD 9 billion to develop, scientifically substantiate,
and commercialize innovative smoke-free products for adults who
would otherwise continue to smoke, with the goal of completely
ending the sale of cigarettes. This includes the building of
world-class scientific assessment capabilities, notably in the
areas of pre-clinical systems toxicology, clinical and behavioral
research, as well as post-market studies. The U.S. Food and Drug
Administration (FDA) has authorized the marketing of versions of
PMI’s IQOS Platform 1 devices and consumables as Modified Risk
Tobacco Products (MRTPs), finding that exposure modification orders
for these products are appropriate to promote the public health. As
of March 31, 2022, PMI’s smoke-free products are available for sale
in 71 markets, and PMI estimates that approximately 12.7 million
adults around the world, excluding Russia and Ukraine, have already
switched to IQOS and stopped smoking. With a strong foundation and
significant expertise in life sciences, in February 2021 PMI
announced its ambition to expand into wellness and healthcare areas
and deliver innovative products and solutions that aim to address
unmet consumer and patient needs. For more information, please
visit www.pmi.com and www.pmiscience.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220623005131/en/
Philip Morris International Martin Schatzky
Martin.Schatzky@pmi.com +54 911 3828 4288
Philip Morris (NYSE:PM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Philip Morris (NYSE:PM)
Historical Stock Chart
From Apr 2023 to Apr 2024