New research by KPMG - commissioned by Philip Morris International - has revealed that almost half of cigarettes (45%) consumed in the UK in 2025 were illicit.
The findings show that illicit consumption rose by 1.5 billion cigarettes in 2025 (vs. 2024), making it the second-largest illegal market in Europe, behind France, for illicit cigarette consumption by volume. The Europe-wide report estimates that more than 10 billion illicit were consumed in the UK in 2025, equating to more than £4.46 billion in lost tax revenue for vital public services.
Of the total cigarette consumption in the UK, 13% of cigarettes are purchased abroad legally, whereas 32.3% are counterfeit or contraband.
The research has highlighted two new trends as significant contributing factors to the boom in the UK’s illicit market over the past year: the rise of ‘front’ shops – retail outlets set up by organised criminal gangs (OCG), and the rise in factories manufacturing illegal cigarettes within the UK.
The research has found a rise in the number of ‘front’ shops selling illicit cigarettes and vapes posing as low-grade grocers, vape shops, candy shops, barbers or mobile phone retailers. Recent BBC reports highlighted gangs running the stores are terrorising communities and also profiting from street drugs, human trafficking, cybercrime, fraud and money laundering.
The studies showed that smuggled and fake brands are typically imported from Turkey, Poland and Belarus, plus free trade zones in the Middle East, as identified by Philip Morris International. However, last year, the report noted how factories were moving ever westward on the continent, towards their key markets of France and the UK.
In the past 12 months this has moved a step further, with a number of high-profile raids of large factories within the UK itself. Each year, these factories were producing hundreds of millions of cigarettes between them, designed to flood the UK market.
Managing director at Philip Morris Limited, Peter Nixon, urged the Government to take action to tackle illicit tobacco and nicotine products, warning that the illegal market for cigarettes is growing exponentially, even as overall cigarette consumption continues to decline.
“This should be a major wake-up call for the government; poorly resourced enforcement is depriving the UK of almost £4.5 billion a year. The past few years have been a boon time for organised crime gangs who are selling illicit cigarettes and vapes with impunity, ruining our high streets and communities.”
Illicit trade prevention manager at Philip Morris Limited, Catherine Goger, added:
“In our fight against these ‘front’ shops, we have expanded our undercover teams who gather evidence and intelligence in communities across the UK. To drive illicit products off our high streets, the government needs to introduce a robust licencing scheme as soon as possible.”
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