A new Oxford Economics report commissioned by British American Tobacco found an average correlation of 80% between real duty-paid cigarette prices and illicit cigarette market share across nine countries from 2015 to 2025. The study found that taxes accounted for an average of 77% of the retail price of duty-paid cigarettes in 2025, while illicit cigarettes were priced between 1.5 and 3.5 times lower than legal products. Across the countries studied, illicit market share increased by an average of 25 percentage points, from 18% in 2015 to 43% in 2025.
Australia and Chile recorded some of the largest increases. Australia’s illicit cigarette market share rose from 13% in 2015 to at least 55% in 2025, with Oxford Economics estimating A$7.1 billion ($5 billion) in lost tobacco tax revenue. In Chile, illicit market share increased from 12% to 53% over the same period, with estimated tax losses of CLP 1.4 trillion ($1.4 billion). The report, which also examined Bangladesh, Brazil, France, Malaysia, the Netherlands, Pakistan, and Ukraine, said illicit trade is influenced by factors beyond price and called for strategies combining tax policy with enforcement measures. BAT said the findings highlight the need for policymakers to consider illicit-market risks when setting tobacco excise rates.
