A recent study shows that illegal cigarette sales remain a significant problem in Germany. In 2023, an estimated 1.6 billion cigarettes were sold illegally, accounting for 2.1 percent of total cigarette consumption.
Illegal trade costs government millions in lost tax revenue
According to a study commissioned by Marlboro manufacturer Philip Morris International (PMI) and conducted by consulting firm KPMG, the number of illegally sold cigarettes slightly decreased from 1.7 billion in 2022. The research methodology involved examining discarded cigarette packets, with 150,000 packages inspected to determine their legality. Philip Morris expert Tammo Körner stated that these illegal operations cost the German government an estimated 368 million euros in lost tax revenue in 2023. He advocated for stricter controls, suggesting that “the federal government should better equip customs to decisively counter tobacco smuggling and counterfeiting.”
Growing illegal production within Germany
The black market encompasses various types of illegal products. While legal tobacco factories in countries like Belarus, Moldova, and Kosovo produce cigarettes intended for illegal distribution abroad, Germany is increasingly becoming a production hub for the tobacco black market. In June 2022, customs investigators uncovered an illegal cigarette factory in Iserlohn, North Rhine-Westphalia, seizing 20,000 cartons of cigarettes, manufacturing and packaging equipment, and counterfeit Marlboro packaging. Körner believes this is just one example of several illegal production sites in Germany. The shift of illegal production from Eastern to Western Europe, including Germany, reduces transportation distances and the risk of customs detection.
International comparison and market factors
The KPMG study, covering 38 European countries, reveals that other nations face even larger black markets. France, for instance, has an estimated 16.8 billion illegally sold cigarettes, approximately ten times higher than Germany, with one in three cigarettes coming from illegal sources. In the UK, 6.7 billion cigarettes are sold illegally, representing one in four cigarettes consumed. Körner attributes these differences to higher taxes and cigarette prices in these countries, which drive greater black market supply and demand compared to Germany.
