Category: Illicit Trade

  • Stakeholders Welcome ‘Economic Sabotage’ Law

    Stakeholders Welcome ‘Economic Sabotage’ Law

    Photo: PMFTC

    Philippine President Ferdinand Marcos Jr. on Sept. 26 signed a law protecting the agricultural sector, including tobacco growers, from illegal products, reports the Manila Standard.

    The Anti-Agricultural Economic Sabotage Act aims to make food more affordable and provide better income to local farmers. The law classifies smuggling, hoarding, profiteering, cartel formation and financing of these crimes involving agricultural and fishery products as acts of economic sabotage. Violators risk life imprisonment and fines up to five times the value of the goods involved.

    “We are deeply grateful to President Ferdinand ‘Bongbong’ Marcos Jr. and his administration for their unwavering support in enacting this law,” said Saturnino Distor, president of the Philippine Tobacco Growers Association (PTGA), after the signing of Republic Act No. 12022. “With its implementation, we are hopeful that tobacco farming will receive adequate protection against the entry of illegal products.”

    The PTGA, which represents 50,000 tobacco farmers, described the law as a critical step to protect the industry from smuggled tobacco. Distor noted that illegal cigarettes harm farmers, especially with the rising prices of legal cigarettes due to tax increases. “We hope the government’s action against smugglers will improve the state of Philippine tobacco and bring relief to our farmers and their families,” he said.

    “We’ve seen the damaging impact of smuggling, particularly the proliferation of fake and illegal nicotine products,” said Anton Israel, founder of the Nicotine Consumption Union of the Philippines. “This new law strengthens the fight against illicit cigarette and e-cigarette trade,” he said.

  • Protocol to Eliminate Illicit Trade Turns Six

    Protocol to Eliminate Illicit Trade Turns Six

    The Protocol to Eliminate Illicit Trade in Tobacco Products celebrates its sixth anniversary today.

    The international treaty, which currently has 69 parties, aims to eliminate all forms of illicit trade in tobacco products through a comprehensive package of measures to be implemented by countries in cooperation with each other. The protocol builds upon and complements Article 15 of the World Health Organization Framework Convention on Tobacco Control, which requires parties to implement measures to counter illicit trade in tobacco products, such as supply chain control measures and cooperation in law enforcement and prosecution.  

    The protocol also addresses issues such as transnational organized crime, corruption, money laundering, national security, losses in government revenues, poverty and tobacco-related diseases. 

    According to the World Health Organization, illicit trade accounts for about 11 percent of total global tobacco trade, and its elimination could increase global tax revenues by an estimated $47.4 billion annually.

  • Smugglers Caught Using Weather Balloons

    Smugglers Caught Using Weather Balloons

    Image: Bilal

    Polish border guards detained two people who had used weather balloons to smuggle cigarettes from Belarus, reports TVP World.

    The suspects had attempted to flee and were found with 1,500 packs of illegal cigarettes worth close to PLN24,500 (€6,377).

    On the same day, border guards in Nowy Dwor found another similar package containing illicit cigarettes worth over PLN23,000 along with the remains of a weather balloon fitted with a tracker.

    Additional balloons were found with packages of cigarettes valued at a combined PLN67,000.

    In the wake of enhanced security measures, including a steel barrier and thermal imaging, along the border between Poland and Belarus, cigarette smugglers have been looking for new ways to move contraband into the European Union.

  • Illicit Cigarette Market Deflates in Ukraine

    Illicit Cigarette Market Deflates in Ukraine

    Photo: IvanSemenovych

    The share of illicit products in Ukraine’s tobacco market dropped to 14.6 percent in July, down from 19.1 percent at the start of the year, reports UNN, citing data from the “Monitoring of the illegal trade in tobacco products in Ukraine” study.

    According to Kantar Ukraine, the state misses out on an estimated UAH23 billion ($556.01 million) in tax income as a result of duty-avoiding tobacco. The volume of the illicit cigarette market in Ukraine is estimated at 6.65 billion units.

    Oleksandr Ruvin, director of the Kyiv Scientific Research Institute of Forensic Expertise, said that despite recent progress, efforts to combat the illicit cigarette trade were not as effective as they could be.

    “At one time, we had an idea to create a thematic register of manufacturers. The State Tax Service provided us with a list of companies licensed to sell tobacco products—more than 50 representatives. The companies were supposed to provide us with reference product samples. We received some of the information, but this work is not being used as effectively as it could be,” he was quoted as saying.

  • UK Urged to Tackle Illegal Vapes

    UK Urged to Tackle Illegal Vapes

    Photo: BAT

    The U.K. government should be cracking down on illegal vapes rather than introducing redundant policies on cigarettes, according to BAT Chief Corporate Officer Kingsley Wheaton.

    Wheaton made his comments in the context of the British government’s “generational tobacco ban.” The U.K.’s previous Conservative administration announced plans to create a smoke-free generation by banning the sales of cigarettes in the future to anyone who is currently aged 14 or under. The new Labour government is continuing with the policy and is also concerned about the prevalence of disposable vapes.

    Wheaton cited a BAT analysis showing that by the time the generational ban takes force, smoking rates will have already fallen below 5 percent in that age category.

    BAT is instead pushing for licensing for retailers selling vapes. With proper enforcement, licensing will help reduce the number of underage children getting their hands on e-cigarettes and level the playing field for all companies operating in the industry, according to the multinationals.

    “We need to move on to a more mature dialog with real solutions for the problems that are out there,” Wheaton was quoted as saying by Bloomberg.

  • Cigarette Seizures up in the Netherlands

    Cigarette Seizures up in the Netherlands

    Photo: think4photop

    The number of illegal cigarettes seized in the Netherlands to date this year has already reached the volume confiscated in all of 2023, reports DutchNews.

    Customs and finance ministry investigators seized 120 million illegal cigarettes since the start of 2024. The biggest haul so far this year was made in Rotterdam, where officials found 27 million cigarettes, which would have generated €6 million in tax had they been legal.

    In July, customs officials confiscated 8 million illegal cigarettes in Someren. That same month, they seized 6 million cigarettes and 4.5 tons of rolling tobacco in Rotterdam.

    Critics attribute the increase in seizures to rising prices. In April, the price of a packet of 20 cigarettes rose to around €11 in the Netherlands, encouraging more smokers to source their tobacco abroad.

    In a 2023 empty pack survey, a quarter of cigarettes had avoided Dutch tobacco duties, up from 15 percent in 2021.

    While nearly 19 percent of the cigarettes had been bought abroad, 4 percent were either fake branded cigarettes or had been smuggled. Two years previously, just 1 percent were either fake or illegal.

    Research by the public health institute RIVM indicates that smokers buy around 10 percent of their tobacco abroad.

  • Price Hikes Fuel Smuggling

    Price Hikes Fuel Smuggling

    Photo: igorkol_ter

    Recent tobacco price hikes in the Netherlands have prompted smokers to source their tobacco abroad, reports Turkiye Today.

    On April 1, the Dutch government increased a special consumption tax, causing the price of a 20-stick pack of cigarettes to rise by €1 ($1.11) to more than €11. By comparison, a similar pack sells for €8.93 in Germany and €6.50 in Belgium. In Luxembourg, which is among the cheapest countries for smokers in western Europe, a pack of 20 cigarettes sells for €5.07.

    Many Dutch smokers have also started sourcing their cigarettes in Turkiye, where tobacco products are frequently offered for less than half of the price in the Netherlands.

    The Netherlands permits travelers to import a maximum of 800 cigarettes from EU countries. For cigarettes obtained outside of non-EU countries such as Turkiye, the duty-free limit is 200 cigarettes.

    Earlier this month, Dutch lawmakers expressed concern about dwindling tax receipts as legal tobacco consumption plummets in the wake of the higher tobacco duties.

  • Brand Protection Market to Double

    Brand Protection Market to Double

    Photo: Tobacco Reporter archive

    The global authentication and brand protection market will reach $6.68 billion by 2030 from $3.34 billion in 2022, reflecting a compound annual growth rate (CAGR) of 9 percent, according to a new report from The Insight Partners.

    The anticipated growth is driven by the emergence of new counterfeit and product-forging mechanisms, which has increased demand for stronger brand security measures.

    In addition, the rise of omnichannel retailing systems benefits the authentication and brand protection market. These retailing systems feature efficient product allocation, better inventory management and real-time inventory visibility.

    North America dominated the authentication and brand protection market in 2022 and is anticipated to have significant growth in the forecasted period. The report’s authors expect the Asia-Pacific market to grow at the fastest CAGR during the projected period.

    The authentication and brand protection market is segmented into overt, covert, forensics and digital. In 2022, the covert segment held a larger share of the global authentication and brand protection market. Covert authentication and brand protection is a safety marker that is invisible to the naked eye, often printed on primary and secondary packaging with security inks. Additional forensic safety layers are also embedded in the materials and can be confirmed by more extensive lab analysis. This extra security layer proves to be very difficult for the counterfeiter but is easily verified by field inspectors.

    Based on technology, the market is segmented into security printing and tamper-proof labels, security inks and coatings, OVDs and holograms, unique codes, bar codes, RFID, authentication ICs, and others. The bar codes segment held the largest share in the authentication and brand protection market in 2022. In addition, the authentication ICs segment is expected to register the highest CAGR during 2022–2030. Authentication ICs are typically mounted on a printed circuit board. They don’t have any contactless capabilities yet, but they are developing. Inclusion of contactless will add to the growth potential of this market as it will allow the use of authentication ICs in more (nonelectronic) applications and products and form factors such as tags and stickers.

  • Illicit Market Remains a Concern: KPMG

    Illicit Market Remains a Concern: KPMG

    Photo: Europol

    European smokers bought more than 35 billion illicit cigarettes in 2023, accounting for 8.3 percent of total EU cigarette consumption, according to a KPMG study commissioned by Philip Morris Products.

    Counterfeit cigarettes remain one of the main sources of illicit tobacco consumption in the region, with 12.7 billion (36 percent) cigarettes consumed, as criminal networks increasingly target higher-taxed and higher-priced markets. Overall, governments in the EU lost an estimated €11.6 billion (12.82 billion) in tax revenue, up from €11.3 billion in 2022. France is still leading the ranking as the country with the largest illicit consumption in all of Europe, with 16.8 billion illicit cigarettes and an estimated €7.3 billion in tax revenues lost.

    “We are witnessing an evolution of organized crime groups in Europe, as they are increasingly locating production facilities nearer Western European countries,” said PMI Senior Vice President of External Affairs Christos Harpantidis in a statement.

    “We consider this phenomenon to be a direct consequence of failed policy approaches that have not done enough to curb illicit trade and reduce smoking prevalence, and it is putting consumers, governments, legitimate businesses, and society alike at risk.”

    We consider this phenomenon to be a direct consequence of failed policy approaches that have not done enough to curb illicit trade and reduce smoking prevalence, and it is putting consumers, governments, legitimate businesses, and society alike at risk.

    Christos Harpantidis, senior vice president, external affairs, PMI

    Interviews with law enforcement agencies included in the KPMG report shed light onto transnational organized crime’s professionalization of their role in the supply chain of illicit cigarettes. According to information from law enforcement agencies, publicly available media articles, and PMI estimates, criminals have expanded the setup of illegal cigarette factories; in 2023 alone, law enforcement data shows that at least 113 clandestine cigarette manufacturing sites in 22 European countries were disrupted by regional and local authorities.

    The steady increase of counterfeit cigarette consumption for the fourth consecutive year across Europe—mainly driven by the U.K. and Ukraine—is now coupled with the rise of all other illicit trade categories, including illicit whites and contraband. Combined with the continued recovery of cross-border legal volumes, after Covid-related travel restrictions ended in 2022, total non-domestic consumption across the 38 European countries in the study has also reached its highest level ever (15.5 percent), equal to more than one cigarette out of six.

    Despite this scenario, KPMG revealed that in 26 European countries illicit consumption share was less than 10 percent of total consumption. Of these, 16 markets had an illicit consumption share of less than 5 percent. And in 25 of the 38 European countries included in the study, the share of illicit cigarette consumption was either stable or declining, compared to 2022.

    We need to continue working together with law enforcement agencies and governments to ensure that illicit trade does not become an even larger problem across the EU.

    Massimo Andolina, president, Europe region, PMI

    “It’s truly encouraging to see a decrease in illicit consumption in countries like Italy, Poland, Romania, and Spain. We need to continue working together with law enforcement agencies and governments to ensure that illicit trade does not become an even larger problem across the EU,” stated Massimo Andolina, president, Europe region, PMI.

    For the first time since its publication in 2006, the KPMG annual research study has broadened its scope and incorporated all Balkan countries. Now, the research covers 38 countries: the 27 EU member states, as well as Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, North Macedonia, Norway, Serbia, Switzerland, Ukraine, and the U.K.

    The Balkan region has shown lower presence of illicit cigarettes compared to some of the Western European countries, such as France or the U.K. Ukraine, on the other hand, remains the country with the second highest volume of illicit cigarettes consumed, at 8.4 billion.

  • IPM Reiterates Commitment to Tackling Illicit Trade

    IPM Reiterates Commitment to Tackling Illicit Trade

    Image: Suriyawut

    To mark India’s 1947 independence from British rule on Aug. 15, IPM India, an affiliate of Philip Morris International, reiterated its commitment toward preventing the illicit trade in tobacco products, which the company says threatens India’s economic interest and consumers.  

    In a 2022 study, FICCI Cascade valued India’s illegal cigarette market at INR229.3 billion ($2.73 billion), causing the government to miss out on INR133.31 billion in revenue, up 46 percent from the 2012 figure. According to the Tobacco Institute of India, the illegal cigarette trade accounts for as much as one-fourth of the cigarette industry in India.

    “Eliminating illicit trade has been a longstanding priority for us and continues to be an integral part of our efforts to drive operational excellence and build a sustainable future,” said IPM India Managing Director Navaneel Kar in a statement.

    “In India, we are invested in the cause, working with law enforcement agencies to educate and raise awareness about illicit tobacco trade. Public-private partnerships based on an inclusive approach by governments, the private sector and civil society are vital to helping combat the trade.

    “Interconnected systems and advanced technologies, such as digitally verified track-and-trace systems, holograms, QR codes and RFID tags, are essential for monitoring and detecting counterfeit products. As India progresses on its path to become a global economic powerhouse, it is critical to take stricter measures to eradicate illicit and build a safer tomorrow.”