The market of illegal cigarettes is particularly large. According to a research report, made in 2015 by KPMG, around one in ten cigarettes in the EU are illegal, which results in 53 billion cigarettes. This includes counterfeit cigarettes, smuggled cigarettes and the so-called ‘illicit whites’ (unknown brands that are purely made for the black market). The share of counterfeit cigarettes is increasing immensely according to the KPMG report. In 2015, there were 4.7 billion counterfeit cigarettes in the EU. That is an increase of 28% compared to 2014.
The EU member states are missing out on 11.3 billion euros of tax income due to the illegal market. Besides, illegal cigarettes are a huge threat to the public health. High amounts of tar, nicotine and even traces of plastic, insects and feces are not uncommon ingredients in illegal cigarettes. The circumstances in illegal factories are often poor, which puts the workers at great risk. Selling illegal tobacco can be very lucrative, which is a reason as to why terrorist organisations often sell illegal tobacco. To sum up, the illegal cigarette market is very harmful in multiple ways.
Many countries strive to reduce the number of smokers in their country by taking more and more progressive measures. One of the most recent ideas is called plain packaging. This means that cigarette packs and other tobacco packaging are no longer allowed to contain trademarks and logos, other than the name of the brand. This would decrease the incentives to buy a pack for consumers. For example in Australia, tobacco manufacturers are only allowed to mention their brand name in a small, generic font. Moreover, the packaging must contain and highlight the warnings and must have an unattractive, dark brown colour.
If manufacturers are no longer allowed to depict their brand, there is not much left of their distinctive power. Because all packaging will look alike, confusion can arise about its origin, which is something many countries try to avoid via trademark legislation. Uniform packaging is easy to reproduce, which can benefit counterfeiting, while enforcers such as the European Anti-fraud office (OLAF), Europol and the national authorities have just stepped up their fight against counterfeit cigarettes.
The question is if all the good intentions actually have a positive effect. Especially the great risks of counterfeit cigarettes are being underestimated, while measures such as plain packaging make counterfeiting so much easier.