Philip Morris Pakistan Limited said it welcomed nationwide enforcement actions targeting the illicit cigarette trade, stating the crackdown would strengthen the documented economy, improve revenue recovery, and support fair competition for tax-compliant businesses. The company said enforcement operations during fiscal year 2025–26 led to seizures of illicit cigarettes and raw materials equivalent to about 17 billion sticks—estimated at nearly 40% of the illegal market—following strategic direction from Shehbaz Sharif to the Federal Board of Revenue and provincial authorities. During a recent visit to Pakistan, Marco Mariotti, president CIS and Central Asia at Philip Morris International, said sustained enforcement is critical for revenue collection and market compliance, noting illicit trade is estimated to cost Pakistan roughly Rs300 billion ($1.1 billion) annually.
Tag: illicit trade
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NSW Tops 100 Store Closures as New Tobacco Taxes Begin
Authorities in Australia’s New South Wales have closed 105 tobacconist shops operating illegally since strengthened tobacco and vaping laws took effect in November 2025. In the past 10 days alone, 30 stores across multiple Local Health Districts were ordered to close for 90 days, with inspectors seizing about 700,000 illicit cigarettes and 3,900 illegal vapes. This comes as a federal tobacco excise increase takes effect today (March 3), raising concerns about a widening price gap between legal and illicit products.
Under the new laws, NSW Health, supported by NSW Police, can impose 90-day closures on premises selling illicit tobacco, illegal vaping goods, or operating without a license, while courts may issue long-term closures of up to one year. The legislation also introduces penalties of more than A$1.5 million ($1.1 million) and up to seven years’ imprisonment for possession or sale of commercial quantities of illicit tobacco, along with new offences and lease termination powers for landlords. Health Minister Ryan Park said enforcement would intensify with 30 additional inspectors added statewide, bringing the dedicated tobacco compliance team to 78 staff.
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Geneva Meeting Boosts Action Against Illicit Tobacco
The fourth session of the Parties to the Protocol to Eliminate Illicit Trade in Tobacco Products wrapped up in Geneva on November 26, with 60 Parties agreeing to strengthen international cooperation and enforcement. Decisions include compiling and analyzing tobacco seizure data, forming working groups on research and best practices, and improving licensing fee monitoring. Illicit trade is estimated to account for 11% of the global tobacco market, costing governments billions.
The meeting also welcomed Vanuatu as the Protocol’s 71st Party, reinforcing global efforts under the WHO Framework Convention on Tobacco Control.
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SA’s Cigarette Market ‘Captured by Criminals’
South Africa’s cigarette trade has been “captured by criminal syndicates,” with three-fourths of all cigarettes now sold coming from illicit sources, the South African Revenue Service (SARS) said this week. Speaking to Parliament’s health committee on October 22, SARS Commissioner Edward Kieswetter said the illegal trade has drained billions in tax revenue and poses a growing threat to the economy. Research from the University of Cape Town, Ipsos, and Tax Justice SA shows the illicit tobacco market has ballooned from 19% in 2014 to 75% in 2025, costing the state roughly R84 billion ($4.9 billion) in excise losses between 2020 and 2022.
Kieswetter described the trade as “industrial-scale criminality,” involving money laundering through gold refineries, property schemes, and offshore investments. He linked the rise of illicit tobacco to weakened enforcement between 2014 and 2018, during the Zuma era, which saw oversight dismantled and revenue stagnate despite steady consumption.
The South African Police Service (SAPS) confirmed that the illicit cigarette trade has become a “national priority threat” linked to organized crime, saying the trade now operates through five-tiered syndicates spanning financiers, smugglers, and distributors connected to drug trafficking and human smuggling networks. Most contraband enters through Zimbabwe, Mozambique, and Botswana, it said.
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Pushing Back Against Illicit Trade
At a GTNF panel in Brussels on illicit tobacco, industry leaders, academics, and regulators warned that well-intentioned policies and slow regulatory systems are helping organized-crime networks flourish — putting legal retailers at risk and undermining public-health goals. Moderator Rohan Pike, director of Rohan Pike Consulting, opened the session by challenging official rhetoric. “The Australian health department cannot issue a press release without using the words ‘world leading,’ when all we’re leading the world in is excise tax and organized crime,” he said, arguing that high taxes and restrictive policies have created perverse incentives for illegal supply. Pike said he now supports accelerated access to reduced-harm products, noting: “If we can switch someone to a reduced-harm product, we’ve reduced smoking.”
Theo Foukkare, CEO of the Australian Association of Convenience Stores, described a market under siege. Pointing to what he called ideological policymaking, Foukkare said decision-makers are listening to a narrow set of experts and ignoring real retail evidence. He recounted attacks on compliant shopkeepers and warned that, if trends continue, “the legal market will cease to exist.” He added that organized networks can import dozens of containers and still profit even when most shipments are seized.
Nick Hodsman, head of anti-illicit trade policy at BAT, stressed the scale of production driving the illicit trade. “Margins organized criminals can make are something the legal industry could only dream of,” he said, highlighting mass production in parts of Asia and growing challenges around emerging nicotine categories. Hodsman called for improved visibility on what is leaving origin countries and what actually arrives in destination markets.
King’s College London’s Dr Alexander Kupatadze warned of the complexity of criminal networks and systemic data weaknesses. He urged closer research and better integration of siloed datasets — across customs, law enforcement, and private firms — to find the “needle” in vast flows of information.
U.S. regulatory expert Lillian Ortega pointed to slow and fragmented review processes for creating a grey market for new products. Ortega blamed antiquated tracking systems, inconsistent federal enforcement, and misdeclared imports that allow illicit goods to reach consumers while compliant manufacturers wait for approvals. “Criminals thrive off confusion,” she said.
Panelists converged on several policy responses: beefing up frontline enforcement and retailer protection, modernizing tracking and customs documentation, improving inter-agency data sharing, and creating faster, clearer regulatory pathways for reduced-risk products to reduce demand for illicit supply.
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Philippines: Illicit Trade Hurting Everyone
The Senate Committee on Ways and Means said illicit trade has been a major factor in the rise of smoking prevalence in the Philippines and a drop in revenue from excise taxes on tobacco products.
According to a survey by the Food and Nutrition Research Institute, smoking prevalence in the country rose from 14% in 2021 to 18% in 2023.
“For almost six years, we reduced smoking prevalence, but in just two years, we’re back to square one,” Senator Sherwin Gatchalian said during the public hearing.
Meanwhile, revenue from tobacco excise taxes fell from a peak of PHP176 billion (USD$3 billion) in 2021 to PHP134 billion (USD$2.3) in 2023.
Gatchalian, who chairs the panel, attributed this to a rise in illicit trade, with data from Kantar showing illegal cigarettes now account for 16% of the market, up from 5% in 2021.
“Illicit trade undermines our efforts,” he said, underscoring the need to address revenue leakages by curbing illicit trade. “These products evade taxes and make cigarettes more accessible, promoting smoking among our people.”
Tobacco products are among eight excisable items in the country, along with alcohol, vapor products, petroleum, automobiles, non-essential goods and services, sugar-sweetened beverages, and mineral products.
The survey also revealed a rise in the use of e-cigarettes among adolescents, with usage skyrocketing from 7.5% in 2021 to 39.9% in 2023.
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India: Over 1,500 Kg of Product Seized in 2024 Virudhunagar Raids
Authorities seized 1,531 kilograms of banned tobacco products in 2024 across 403 shops and 44 vehicles in Virudhunagar, India, imposing fines totaling ₹1.06 crore (US$ 12,340) on offenders. The operations were part of the state government’s initiative to eliminate banned tobacco sales, particularly near schools and colleges.
Joint teams from the Food and Safety Department and the police conducted 831 raids throughout the year. Offending shops were sealed, and vehicles transporting illicit tobacco were confiscated. In early 2025, additional raids led to the seizure of 16.275 kilograms of banned products from six shops in just four days.
District Collector VP Jeyaseelan affirmed that strict measures will continue against those violating the ban, underscoring the administration’s commitment to public health and safety. The crackdown aims to curb access to harmful products and deter illegal sales in sensitive areas.
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FDA Tightens Oversight on Vape, Pouch Imports
The FDA has updated import alerts 98-07 and 98-06 to strengthen the regulation of unauthorized e-cigarettes and other tobacco products entering the country. The changes clarify that all new vapor products must have FDA authorization to be marketed legally in the U.S. Under Import Alert 98-07, unauthorized vapor imports may face detention or refusal of entry without physical examination. The update also provides clearer guidance for importers, customs brokers, and federal partners, including links to the FDA’s searchable database of authorized tobacco products.
Import Alert 98-06 focuses on non-e-cigarette tobacco products, including smokeless tobacco and nicotine pouches such as NOIS, LYFT, and SKRUF. These products, like vapor products, may also be detained if unauthorized. The FDA emphasized that mis-declared products remain a key focus, citing the seizure of three million units of unauthorized vapor products worth $76 million in collaboration with U.S. Customs and Border Protection. To date, the FDA has authorized only 34 vapor products and devices, underscoring its commitment to enforcing compliance and preventing illegal products from entering the market.
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At the Turning Point
Smuggled cigarettes on the Latvian border Belarus’ role in the illicit cigarette trade is under scrutiny.
Contributed
For years, Belarus has been under scrutiny for its alleged distribution of illegal counterfeit cigarettes, a practice that is now under severe pressure in the current political landscape. This pressure casts a shadow of uncertainty over the industry’s future.
A cornerstone of the Belarus national budget, the tobacco industry contributed BYR2.5 billion ($76.45 million) in 2023. However, the industry is now facing alarming trends, as highlighted by Belarus President Alexander Lukashenko during a governmental meeting in August 2024.
The reasons for the existing challenges might be different, Lukashenko vaguely said, emphasizing that despite that, “It is necessary to develop measures to preserve production and export volumes to the maximum extent possible.”
The Belarusian tobacco industry has been shrouded in secrecy for over a decade. In 2015, the last time official information was revealed, Belarusian authorities set the quota of cigarette consumption on the domestic market at 30 billion pieces. At that time, local analysts indicated that the figure had nothing to do with reality.
Research by KPMG showed that the actual consumption of cigarettes in Belarus is close to 18 billion pieces. Around 13 billion cigarettes are exported, of which 8.6 billion end up in Russia and 4.3 billion in the EU.
Woes about the flow of cheap cigarettes, often smuggled, from Belarus have become common in recent years not only in the European Union but also in Russia.
In 2020, the Russian association Anticounterfeit calculated that Belarus’ domestic consumption was around 17 billion cigarettes and that production nearly three times exceeded the country’s demand. In a letter to the Russian Ministry of Justice, Anticounterfeit claimed that cheap cigarette production was put on an industrial scale in Belarus. The nameplate capacity of the Belarusian tobacco factories was estimated at 67 billion pieces, meaning export potential was tremendous.
In 2023, Belarus accounted for 84.5 percent of illegal cigarettes sold on the Russian market, estimated the Russian National Scientific Competence Center for Combating Illegal Circulation of Industrial Products. In total, illegal—counterfeit and smuggled—cigarettes represented 15.6 percent of sales on the Russian market. This illicit trade cost the Russian budget around RUB130 billion ($1.35 billion) of lost income in 2023, the analysts calculated.
Belarussian tobacco consumption is estimated to be close to 18 million pieces per year. Shut Borders
During the past few years, the flow of illegal cigarettes from Belarus to the European Union has subsided, as in the context of political tensions, the Baltic countries and Poland tightened border controls.
As estimated by KPMG, the volume of smuggled cigarettes from Belarus to the EU dropped by 500 million in 2023 and by almost 2 billion pieces over the past three years. The analysts also cite the tighter control and closure of a number of checkpoints on the border for the decline. The place of Belarusian cigarettes is being taken by suppliers from other countries, primarily Turkiye and Algeria.
Counterfeit supplies from Belarus to European countries decreased from 2.1 billion to 1.5 billion cigarettes over the year.
However, Belarus remains the absolute leader in the supply of illegal “white” cigarettes, which mean those smuggled and sold under their own brands to European countries.
In this category, Belarus holds a staggering 43 percent share in total deliveries to Europe. A year earlier, this figure was around 52 percent, KPMG calculated.
The most popular western destination for tobacco smuggling from Belarus is Poland. Last year, 0.74 billion illegal Belarusian cigarettes entered the country, which is almost 17 percent less than in 2022 and almost half as much as in 2020. The supply of illicit cigarettes from Belarus to Lithuania fell by 15.2 percent to 0.39 billion pieces and from Belarus to Latvia fell by 27.35 percent to 0.16 billion pieces.
Russia has declared war on counterfeit cigarettes from Belarus. Unraveling Tobacco War?
However, the main blow comes from the Russian market, where authorities also tightened the screws on illegal sales. Observers believe that problems in Russia were the key reason for Lukashenko’s concerns during the recent government meeting.
“The meeting is definitely not happening out of nowhere. But we need to call things by their proper names. We are not talking about problems with exports but with smuggling. Legal exports have been virtually nonexistent for a long time,” Nick & Mike, a local analytical Telegram channel reported.
“Strengthening controls on the western border, where Belarusian state counterfeit goods are seized in industrial quantities, including from tanks with resin, is nothing compared to what the eastern neighbor is doing. Russia has tacitly declared a ‘tobacco war’ and has been striking at illegal businesses,” the analyst claimed, referring to the intensified efforts by Russian authorities to curb illegal tobacco traffic from Belarus.
For years, Russian authorities have been turning a blind eye to illegal cigarette imports from Belarus, but this era seems to be coming to its end, a source in the tobacco industry who wished to remain anonymous told Tobacco Reporter.
“I would not call it a war, though. This is primarily about bringing the domestic market in order. Everybody knew that a situation where Russia loses over $1 billion in tax revenues every year to cigarette smuggling from Belarus would not last forever. The country could afford it during the rich times, but now every penny counts,” the source added.
In April 2024, Russia listed tobacco products among the goods of strategic importance. Andrey Mayorov, deputy head of the main directorate for customs control at the Russian Federal Customs Service, revealed that this move helped the authorities tighten their control of illegal tobacco traffic. One of the first consequences of the step, he added, was a hike in the number of criminal cases opened against tobacco smugglers.
More legal changes are on the way to turn down illegal cigarette imports to Russia from Belarus.
An agreement on indirect taxes between Russia and Belarus scheduled to gradually come into force through 2027 is expected to fully protect the Russian market from gray imports of cigarettes from Belarus, assumed Alexei Sazanov, deputy finance minister of Russia.
“The problem of gray imports stems from a significant difference between tax rates in the countries: Russian excise rates on tobacco products are significantly higher than in Belarus. This means that Belarusian tobacco manufacturers, producing cigarettes in their country, simply supply part of the goods to the Russian market, de facto paying taxes at Belarusian rates,” Sazanov explained.
The reform is stretched in time not to provoke “social and economic tensions in Belarus,” the deputy minister added.
Change of Players
The Belarusian tobacco industry is also going through a profound transformation, with Western companies gradually reducing their presence in the country.
In September 2024, Japan Tobacco International and its British subsidiary Gallaher Group terminated licensing agreements with the Tabak-Invest factory, suspending production of the brands Winston, Camel, Sobranie and Monte-Carlo.
JTI’s Minsk office confirmed that the agreement originally concluded in 2008 is no longer in force, declining to provide additional details.
In December 2023, Tabak-Invest and several of its co-owners were subjected to U.S. sanctions. The restrictions prohibited U.S. citizens and businesses from any deals with sanctioned parties.
In the meantime, JTI continues doing business in Russia. In March 2022, the company announced a suspension of investments in its four factories and marketing activity in the country. However, in November 2023, the company announced it would continue operations, complying with international and Russian regulations.
JTI may switch to importing its brands from Russia to Belarus, writes Belmarket, a local business news outlet. Alternatively, the company could sign a new license agreement with a Belarusian tobacco factory that is not subjected to Western sanctions. This could be newcomers Sentoni PRO and Alidi-West, Belmarket’s analysts speculated.
Alidi-West is a Russian company that distributes Kent cigarettes. It kicked off sales in Belarus in July 2024. Sentoni PRO is another firm registered to sell cigarettes in the country this year.
According to the Belarusian Ministry of Taxes and Duties, Sentoni PRO will produce Kent, Pall Mall, Rothmans, Vogue and Lucky Strike brands.
These players may also launch production at the capacities previously run by Western firms.
BAT in Belarus held a contract manufacturing agreement with the Grodno tobacco factory Neman. After Neman was subjected to the U.S. sanctions in 2021, the contract was canceled, and a part of BAT’s production was transferred to Tabak-Invest.
Around the same time, sanctions were also imposed against another Minsk factory, Inter Tobacco, which forced Philip Morris to withdraw from the license production.
In September 2023, BAT announced a deal to sell its business in Russia and Belarus to a consortium of Russian investors and local management, BAT Russia. Upon completion of the “business transfer,” the new structure became known as the ITMS Group of Companies. BAT left the business to its management along with the rights to the trademarks.
The gradual withdrawal of foreign business from Belarus could add pressure to the tobacco industry, which is braced for a hard time ahead.