Tobacco smuggling remains a significant challenge across Europe, impacting public health, government revenues, and security. Two recent reports from Ipsos and Emerging Europe provide a glimpse into the hazards posed by illicit tobacco trade, highlighting its widespread impact despite regulatory efforts.
The European Union introduced the Tobacco Products Directive (TPD) in May 2019 to curb illicit trade and improve supply chain transparency. Despite this, illicit trade remains alarmingly high in several regions. The Western Balkans, for instance, has long been a route for smuggled cigarettes heading toward Western Europe. Ipsos data shows that in Moldova, illicit cigarette trade reached 9.8% in 2024, with certain categories, such as "illicit whites," rising by 2.3 percentage points. In Montenegro, 27.9% of smokers rely on smuggled tobacco, contributing to a thriving underground market.
Smuggling is not only a financial burden on governments but also a social and economic risk. The Romanian-Ukrainian border, for example, has been a key transit point for illicit goods. According to Emerging Europe, Romania loses approximately half a billion euros annually due to cigarette smuggling. In Ukraine, illicit tobacco trade led to tax revenue losses of 20.5 billion hryvnias (505 million euros) in 2022 alone. Such losses deprive governments of funds needed for public services and economic development.
Illicit tobacco products pose a greater health risk than regulated ones. Many counterfeit cigarettes contain harmful substances that exceed legal safety limits. With weak oversight, smuggled tobacco can introduce unknown additives, increasing risks for consumers. Bulgaria, a key hub for tobacco smuggling, saw the consumption of 0.2 billion counterfeit and contraband cigarettes in 2021, costing the government an estimated 25 million euros in lost tax revenue. The country has now shifted its focus to tackling the illicit vape market, with 40,000 illegal vapes seized in early 2024.
Curbing illicit trade requires a multi-layered approach. Strengthening border controls and law enforcement is crucial, but technological solutions like track and trace systems play an essential role in disrupting smuggling networks. These systems ensure every tobacco product is uniquely identified and tracked from production to point of sale, making it harder for illicit goods to enter the legal supply chain. Despite the implementation of the Tobacco Products Directive, further advancements in track and trace solutions can help authorities enforce compliance and reduce illegal trade more effectively.
Tobacco smuggling is a persistent challenge, and while regulations such as the TPD have made strides, the numbers remain high. Addressing the issue requires cooperation between governments, regulatory bodies, and technology providers. With track and trace solutions, authorities can close the gaps that smugglers exploit and work towards a more transparent and secure tobacco market.
By leveraging technology and maintaining strict enforcement, we can reduce the economic and social risks posed by illicit tobacco trade and ensure a safer, more regulated marketplace.
