While the proportion of UK smokers decreases year-on-year1, the most recent KPMG Report on Illicit
Cigarette Consumption in Europe – commissioned by Philip Morris International2 – shows that UK illicit cigarette consumption, as the percentage of overall cigarette consumption, has accelerated by almost 50% from 2020 to 20243. More than one in four cigarettes consumed in the UK in 2024 was illicit4, and as a direct result of the illicit trade, the total lost tax revenue reached just under £3.2 billion5.
As a consultant on illicit trade, I have seen the black market evolve from a small-scale market into a sophisticated network orchestrated by organised crime groups at an industrial scale.
Will O’Reilly, former Scotland Yard DCI & freelance Illicit Trade Investigator
What are the emerging trends in illicit trade that government officials should be aware of?
There has been a significant rise in the availability of illicit cigarettes and vapes. We used to see contraband cigarettes smuggled from lower-cost European countries. But, during Covid, with international travel paused, organised crime stepped in to fill the gap – producing low-cost counterfeit cigarettes that flooded the market. Recently, we have seen illicit cigarettes priced as low as £2.50, as sellers lower their prices to compete in the oversupplied market.
Concerning illegal vapes, we are seeing a rise in tank size. On our undercover test purchase visits, we have seen tank sizes of 15ml – significantly more than the 2ml legal tank size limit – often with flavours and packaging designed to attract children.
How is the face of the illicit trade changing?
The illicit market used to be supplied by small-time smugglers; a ‘man in a white van’ would drive around, supplying shops with small amounts of smuggled products. Now, there has been a worrying surge in the presence of organised crime groups taking control of the illicit market with a sophisticated supply chain on an industrial scale.
Trading Standards and HMRC are busy trying to stamp out this trade, but the threat of seizures fuels increasingly inventive ways that sellers find to avoid detection. We have seen sellers enhance their concealment methods, with hidden compartments behind meat counters, or nearby storage facilities disconnected from stores to protect illicit stock.
On our undercover visits, we have found that stores have the same variants of counterfeit products, which indicates a large-scale supply that is being sold by organised crime groups. More recently,
we are noting the increase of vertical integration in the illicit trade; producers are selling these products to consumers via shops solely set up to sell illicit products. This means they are controlling most, if not all, of the product’s life cycle to keep costs low and secure the highest profit.
How does illicit trade impact the UK public?
Illicit nicotine is a low-risk, high-reward trade. When a pack of illicit cigarettes cost 20p to make and retails for £4-£7, the profit margin reward significantly outweighs the risk of a small fine. One container load of illicit tobacco/nicotine products can net up to £2 million of profit for organised crime groups.
This lucrative trade funds more serious crimes, such as the supply of firearms, drugs and even human trafficking. We do regular test purchase visits across the country. This is not a localised issue, nor is it confined to deprived communities alone. The worsening issue of illicit trade in the UK serves as a reminder that we cannot afford to be complacent.
If you would like to discuss this topic further, please send an email to Catherine.Goger@pmi.com
REFERENCES
1. ONS: Adult Smoking Habits in the UK: 2023
2. KMPG 2023 Report: Illicit cigarette consumption in Europe, p.219, illicitcigarette-
consumption-in-europe-2024-results.pdf
3. Ibid, 2020 (17.1%) versus 2025 (25.6%) (25.7/17.1) – 1 = 49.71%
4. Ibid
5. Ibid