Ukraine second in Europe by quantity of illicit cigarettes, fifth by share of illicit cigarettes on market - KPMG

MOSCOW. June 30 (Interfax) - Ukraine was the second-largest market in Europe in 2022 for illicit cigarette consumption, with 7.4 billion cigarettes, behind France's 16.9 billion, Ukrainian media said, citing a KPMG report published on Thursday.

In 2022, the share of illicit cigarettes in Ukraine stood at 19.9%, the fifth result in Europe, with budget losses totaling 636 million euros, the report said.

The illicit cigarette market in Ukraine started to grow in 2018, though it declined by 200 million cigarettes in 2022, it said.

The third-largest illicit market in Europe is the United Kingdom, with 5.9 billion illicit cigarettes in 2022, which is 500 million more than in 2021, according to the KPMG report.

Countries ahead of Ukraine by the share of illicit cigarettes on the market are France (32%), Ireland (24%), the UK (21%), and Greece (21%). On this list, Ukraine is followed by Lithuania (19%), Latvia (15%) and Finland (15%).

KPMG's annual study on illicit cigarette consumption in the EU, the UK, Norway, Switzerland, Moldova and Ukraine also shows that 35.8 billion illicit cigarettes were consumed in the EU alone in 2021 (35.5 billion in 2021), causing the governments to lose nearly 11.3 billion euros in tax revenue, a 8.5% rise from the year before. Ukraine was included in the KPMG report for the first time.

"The expansion of the illicit cigarette market in the EU is partly due to the continuous growth of illicit cigarette consumption, which reached the highest level over the entire history of the study. The overwhelming majority of counterfeit cigarettes (61.5%) were consumed in France," it said.

As reported, the Kantar Ukraine company estimated the share of the illicit cigarette market in Ukraine at 20.2% in February 2023, up from 16.9% in 2021, and from 6.9% in 2020. The growth was due to an increase in the share of counterfeit products by up to 7.9%, and Duty Free-marked products by up to 10.8%.

Approximately 83% of all counterfeit products are brands of international tobacco companies.

The Kantar company's tentative estimates put the Ukrainian budget's tax losses in 2023 because of the illicit cigarette market at around 22 billion hryvni.

The Ukrainian President's Office, for its part, announced a readiness to step up the crackdown on counterfeits on the excisable goods market, including the tobacco market.