Illegal cigarette trade: Germany loses 368 million euros!

Illegal cigarette trade: Germany loses 368 million euros!

The illegal sale of cigarettes remains a serious problem in Germany, according to a new study carried out by consulting firm KPMG on behalf of Philip Morris International (PMI). Last year, an estimated 1.6 billion cigarettes were sold on the black market. This figure represents about 2.1 percent of total cigarette consumption in the country. Last year it was 1.7 billion, indicating a stagnating but worrying situation.

The study authors' investigation assessed trash bags and cigarette packs found on the streets to determine whether they were legally sold products. In total, the researchers checked 150,000 cigarette packs to create a reliable data base.

High tax losses

The extensive study shows that the state is losing significant tax revenue as a result of these illegal transactions. According to KPMG, the estimated tax losses for 2023 amount to around 368 million euros in Germany alone. Tammo Körner, an expert at Philip Morris, is therefore calling for stricter controls and argues that customs should be better equipped to more effectively counteract tobacco smuggling and the production of counterfeits.

The study further shows that illegal cigarette products come from a variety of sources. What is particularly impressive is the fact that in countries such as Belarus, Moldova and Kosovo, cigarettes produced in legal tobacco factories often do not end up for legal sale, but are exported through illegal channels. There are also illegal production facilities in Germany, such as a factory excavated in Iserlohn in June 2022, where customs investigators found 20,000 cartons of cigarettes and a complete manufacturing and packaging facility.

Körner describes the situation in Iserlohn as just the tip of an iceberg, as Germany is increasingly becoming a production country for the tobacco black market. The illegally manufactured cigarettes are often then brought to France or Great Britain, where higher profits can be made. “This is a very lucrative business for criminals, although the actual masterminds are rarely caught,” he adds.

Comparison to other European countries

The KPMG study also covers 38 European countries, and the results show that the black market in other countries is much larger than in Germany. The estimated number of cigarettes sold illegally in France is 16.8 billion, which is almost ten times as high as in Germany. These statistics make it clear how different the market conditions are in the individual countries. In France, every third cigarette smoked comes from illegal suppliers, while in Germany it is only every fiftieth.

In Great Britain there are 6.7 billion illegal cigarettes, and here one in four cigarettes comes from black market offers. “The high taxes and therefore also the prices for cigarettes are significantly higher in these countries than in Germany, which significantly increases the demand for illegal products,” says Körner, explaining the differences between the countries.

In view of this worrying development, it is essential that both political decision-makers and customs authorities in Germany and Europe keep an eye on it and take appropriate measures to put a stop to the illegal trade and production of counterfeit cigarettes.

For more information, a comprehensive analysis is available www.kreiszeitung-wesermarsch.de deeper insights into this topic and the background of the study.