LAUSANNE, Switzerland (BUSINESS WIRE) April 17, 2013
For the sixth year in a row, the illegal trade of cigarettes in the European Union reached a new record high, a KPMG study revealed today. In 2012 the levels rose to 11.1%, compared to 10.4% in 2011, resulting in an estimated EUR12.5 billion in lost tax revenues to Member States.
“In the midst of the economic crisis and budget deficits, illegal cigarettes continue to plague Europe, costing Member States billions in lost taxes and destroying communities,” said Artyom Chernis, Philip Morris International’s (PMI) Vice President, Illicit Trade Strategies and Prevention. “This problem cannot be ignored by decision makers. Action is needed, and needed now to curb this activity and to find and prosecute the criminals and the networks that promote it. In addition, a comprehensive and thoughtful approach to policies at the EU and Member State level to both combat this problem and ensure it is not made worse in the years to come is essential.”
The study, which is conducted annually by KPMG for Philip Morris International Inc. (PMI) (NYSE/Euronext Paris PM), the European Commission and all 27 EU Member States also found that
Twelve countries' consumption of illegal cigarettes exceeded the EU average (of total cigarette consumption), including Lithuania 27.5% Ireland 19.1% Finland 16.9% UK 16.4% France 15.7% Greece 13.4% Poland 13% and Germany 11.1%. The UK, Greece, Italy, and Estonia are home to the sharpest increases in illegal cigarette consumption since 2011. Consumption of illicit cigarettes increased to 65.5 billion cigarettes an amount equivalent to the entire legal markets of France and Portugal combined. It is estimated that had the cigarettes sold on the black market been sold in the legal market, Member State governments would have gained an additional EUR34.3 billion in tax revenue since the beginning of 2010. Southern European countries continued to increase their share of the illegal cigarette market, a trend that began in 2009. This is primarily a result of a 50% increase in Italy between 2011 and 2012. "Illicit white" cigarettes cigarettes that are manufactured solely for the purpose of being smuggled now constitute one quarter (24.3%) of the illegal cigarettes smoked in Europe, compared to just 2.4% in 2006.
The illicit trade in tobacco products fuels organized crime and damages economies and societies in the EU and around the world. The primary drivers of this activity are high profitability compared to low risk of penalties for criminals insufficient financial and human resources and lack of cross border cooperation to combat the problem extreme tax and regulatory schemes that shift consumption from the legal to the illegal tobacco market the current economic downturn and low public awareness about the penalties and consequences of the illegal tobacco trade.
PMI has a dedicated team which works closely with governments and enforcement groups around the world to address this issue. Tackling the problem requires both the private and public sectors to address the supply and demand of illegal tobacco products, in addition to ensuring that the regulatory and fiscal environment does not further drive its growth.
To read KPMG’s report, understand more about the black market for tobacco and to learn what PMI is doing to meet this challenge, visit
About Philip Morris International Inc.
Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in more than 180 markets. In 2012, the company held an estimated 16.3% share of the total international cigarette market outside of the U.S., or 28.8% excluding the People’s Republic of China and the U.S. For more information, see
KPMG Study on the illicit cigarette consumption in the EU
KPMG has conducted this study every year since 2006, as part of the cooperation agreement between PMI, the European Commission and the EU member states. The results of these studies have been shared with the European Anti Fraud Office (OLAF).
CONTACT Philip Morris International
PMI Press Office
Phone 41 (0) 58 242 4500
E mail media
SOURCE Philip Morris International Copyright Business Wire 2013
Order free Annual Report for Philip Morris International, Inc.
Visit /?ticker US7181721090 or call 44 (0)208 391 6028
E-cigarettes avoid eu regulation, anti-smoking advocates left fuming
E cigarettes may be on the rise, as the European Parliament just voted not to regulate them like medicine.
Last month we wrote about the growing push back domestically against the spread of electronic cigarettes, e cigarettes for short. Cities like New York are considering ways to ban them outright, or at least raise the purchasing age up to 21.
And a number of anti tobacco advocates argue that the devices, which vaporize liquid nicotine for inhalation, are less a smoking cessation device than they are a tactic to lure in younger customers.
But now, in a move likely to rile up anti smoking advocates, the European Parliament rejected a proposed ban on the sale of e cigarettes alongside most other tobacco products. Advocates of the ban favored classifying e cigarettes as medicines, subjecting them to much harsher regulation. Had the ban succeeded, many countries would have only permitted their sale in pharmacies or even required a prescription.
On one side, advocates of e cigarettes decried and even protested the ban. Long time nicotine addicts say that making them more difficult to find will lead to more tobacco related deaths, by restricting access to what they say is a more healthy alternative.
In a move that almost calls to mind the now hilariously misleading advertisements from the 1950s, a coalition of French doctors denounced the possible ban, calling e cigarettes “infinitely safer,” and an important part of the country' s tobacco cessation efforts.
But on the other hand, a lot of people, including the World Health Organization, are skeptical. (Let me reiterate that much more skeptical.) They say the health effects of the devices have yet to be determined, and need to be meticulously studied before their availability is allowed to spread.
In light of the EU' s decision, momentum seems to be pushing solidly against the anti smoking side. One of the biggest cigarette companies, Lorillard (LO) is buying up e cigarette brands like hot cakes.
Lorillard already owns Blu, one of the largest e cigarette companies in the US, and recently announced the purchase of another brand in the UK. Two companies that exclusively make e cigarettes are already trading on pink sheets.
The other big names in tobacco, Altria (MO), Reynolds (RAI), and British American Tobacco (BTI) have all bought patents for technology related to e cigarettes, and started working on brands themselves. And analysts are projecting that the market for e cigarettes will be twice the size in 2013 as it was in 2012.
That being said, e cigarettes are still relatively unstudied. Attorneys General from 40 states have started pressuring the FDA for details on how to move forward (although the government shutdown isn' t making this very easy).
Given their status as a smoke less alternative to help you quit the normal ones a single study with negative findings on e cigarettes could send the whole thing up in smoke.
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Do you see investing opportunities in e cigarettes? Use the interactive list below to begin your analysis.
1. Lorillard, Inc. (LO, Earnings, Analysts, Financials) Engages in the manufacture and sale of cigarettes in the United States. Market cap at $17.09B, most recent closing price at $45.47.
2. Reynolds American Inc. (RAI, Earnings, Analysts, Financials) Manufactures and sells cigarette and other tobacco products in the United States. Market cap at $26.92B, most recent closing price at $49.27.
3. British American Tobacco plc (BTI, Earnings, Analysts, Financials) Engages in the manufacture, distribution, and sale of tobacco products. Market cap at $98.83B, most recent closing price at $103.27.
4. Altria Group Inc. (MO, Earnings, Analysts, Financials) Engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. Market cap at $69.47B, most recent closing price at $34.70.
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)
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