The UK’s illicit cigarette trade has continued to grow in the past year, findings from KPMG’s annual study show.
Counterfeit and contraband consumption grew by over 6% to hit 16% of total consumption in 2015, making the UK the third biggest market for illicit cigarettes in the EU behind Poland and France.
The largest volumes of counterfeit and contraband cigarettes continued to originate from Poland and Pakistan, with an additional 0.4bn cigarettes from Romania in 2015.
Counterfeit cigarettes in particular showed significant growth, with almost 80% of counterfeit packs found to feature duty free labelling.
Responding to the report, which was commissioned by the UK’s major tobacco manufacturers, Paul Adeleke, from Philip Morris Limited, said: “This illegal activity not only comes with a financial cost, but it fosters criminality in local communities. Philip Morris International continues to devote significant resources in combating this problem as it strongly believes that effective solutions require solid cooperation between governments, law enforcement agencies, manufacturers and retailers.”
If the total black market volume had been consumed legally, an additional tax revenue of €2.8bn would have been raised in the UK.
The report comes just weeks after the implementation of the EU Tobacco Products Directive (EUTPD) which tobacco manufacturers fear will boost demand for cheaper illegal tobacco.
The EUTPD banned the production of pack sizes smaller than 20 cigarettes and 30g of hand-rolling tobacco, a move which will require adult smokers to buy larger more expensive packs.