Philip Morris International: New Report Exposes Continued Impact of Illicit Tobacco Trade in the European Union
June 06 2019 - 4:00AM
Business Wire
To achieve a world without cigarettes, PMI
supports ongoing efforts to secure a world without illicit
trade
Philip Morris International Inc. (PMI) (NYSE: PM) today renewed
its call for continued action against illicit tobacco trade
following the release of a new report produced by KPMG, which
provides a stark reminder of the negative challenges and financial
costs associated with illicit trade.
The independent KPMG “Stella Report,” commissioned by PMI,
reveals that in 2018 the black market for cigarettes in the
European Union (EU) cost governments a total of 10 billion euros in
lost tax revenues and was equivalent in size to the total legal
cigarette sales in the U.K., Austria and Denmark combined. Overall
illicit cigarette consumption levels remained stable compared to
last year; however, the report found a more than 30 percent
increase in counterfeit consumption—the largest amount recorded to
date.
“Beyond damaging government revenues, harming legitimate
businesses—including our own—and fueling crime in local
communities, the availability of cheap, unregulated cigarettes on
the black market undermines efforts to reduce smoking prevalence
and prevent youth from smoking,” said Alvise Giustiniani, PMI’s
vice president illicit trade prevention. “For PMI to have impact in
our drive to unsmoke the world, we must sustain our combined
efforts to eliminate illicit cigarette trade, while ensuring
responsible access to better alternatives for the men and women who
would otherwise continue to smoke.”
According to the report, in 2018, illicit cigarette
consumption—i.e., the consumption of counterfeit and contraband
cigarettes—in the E.U. was estimated at 8.6 percent of total
consumption, representing 43.6 billion cigarettes.
Other findings include:
- Counterfeit was the only category to
show year-on-year volume growth in 2018, while contraband, illicit
whites and other illicit product volumes declined.
- Half of the countries included in the
report saw an increase in counterfeit consumption. The largest
counterfeit cigarette volumes were reported in Greece (1.5 billion
cigarettes) and the U.K. (0.9 billion cigarettes).
- Non-E.U. countries remain the largest
source of illicit cigarettes consumed in the E.U.; however, the
report found a reduced incidence of illicit cigarette consumption
in E.U. Eastern border countries, suggesting that law enforcement
activities in those areas are bearing fruit.
- Consumption of legal non-domestic
cigarettes grew by 10 percent in 2018, indicating that consumers
purchased lower-priced products when traveling, rather than using
the illicit market.
Illicit trade is a complex issue, damages many sectors,
negatively impacts societies and respects neither borders nor laws.
No one government or single industry can address this problem on
its own; everyone has a role to play. To combat the flow of illicit
goods, PMI invests in strict controls for its supply chain and
supports regulations such as the FCTC Protocol to Eliminate Illicit
Trade in Tobacco and the recently enacted tracking and tracing
provisions under the EU Tobacco Products Directive. Furthermore,
PMI continues to work with private and public actors alike to help
advance the global anti-illicit trade efforts, including through
PMI IMPACT, a global initiative supporting third-party projects
against illegal trade and related crimes.
For more information about PMI’s illicit trade prevention
efforts, visit StopIllegal.com.
About KPMG’s Stella Report:
A detailed overview of results and methodology is available
here:
https://public.tableau.com/views/ExecutiveSummary-TOUPLOAD/ProjectStella-ExecutiveSummary?:embed=y&:showVizHome=no&:display_count=yes&:toolbar=no#3
KPMG has developed and refined its methodology for quantifying
counterfeit and contraband cigarette incidence across the E.U.
since 2006. Furthermore, the report’s 2018 results have been
reviewed by an independent expert panel of distinguished
professionals in law enforcement, security, brand protection and
tobacco control.
About Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is leading a transformation in
the tobacco industry to create a smoke-free future and ultimately
replace cigarettes with smoke-free products to the benefit of
adults who would otherwise continue to smoke, society, the company
and its shareholders. PMI is a leading international tobacco
company engaged in the manufacture and sale of cigarettes,
smoke-free products and associated electronic devices and
accessories, and other nicotine-containing products in markets
outside the U.S. PMI is building a future on a new category of
smoke-free products that, while not risk-free, are a much better
choice than continuing to smoke. Through multidisciplinary
capabilities in product development, state-of-the-art facilities
and scientific substantiation, PMI aims to ensure that its
smoke-free products meet adult consumer preferences and rigorous
regulatory requirements. PMI’s smoke-free IQOS product portfolio
includes heat-not-burn and nicotine-containing vapor products. As
of March 31, 2019, PMI estimates that approximately 7.3 million
adult smokers around the world have already stopped smoking and
switched to PMI’s heat-not-burn product, which is currently
available for sale in 47 markets in key cities or nationwide under
the IQOS brand. For more information, please visit www.pmi.com and
www.pmiscience.com.
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Martin SchatzkyPhilip Morris International Media OfficeT. +41 79
479 7868E. martin.schatzky@pmi.com
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