The recent hike in cigarette prices has caused a huge boom in black market tobacco. A recent report by the European Anti-Fraud Office (OLAF) indicated over 545 million illegal cigarettes were seized by authorities 2017. While the black market is thriving worldwide, it is particularly virulent in Europe.
The OLAF report highlights the fact that the market, despite government efforts, is growing at an alarming rate. Seizures in 2017 increased from the previous year by a whopping additional 76 million trafficked cigarettes. The trend is obvious when you look further back, as 2014 figures plateaued at 300 million. So while legal cigarette sales are dwindling, black market sales are soaring in direct proportion.
A black market that spares no one
To stand up to this wave of illegal products, the OLAF is working with governments concerned by the issue, that is to say almost the entire planet! OLAF is tasked with monitoring nations that have been known to distribute “contraband” tobacco. These include Montenegro, Russia, China, and various states in North Africa. The Port of Bar, where thousands of cargo containers transit every day, is particularly targeted by surveillance efforts.
OLAF hopes to monitor the whole logistical chain, from manufacturing to sales, to limit the distribution of fraudulent products. The OLAF is taking a central role in this effort because, ultimately, most illegal cigarettes find their way to Europe. Indeed, 62% of all contraband tobacco eventually ends up in France, Italy, Germany, the UK, or Poland.
Interestingly, it seems public health is not the main justification for these efforts to curb this soaring parallel market. The issue for governments is losses in potential tax revenue, estimated at 10 billion euros across Europe. The money ends up pocketed by crime syndicates, and often feeds into other, more worrying sectors of activity (arms, terrorism, human trafficking).
The collaboration between OLAF and member states seems to be bearing fruit, thankfully. A number of cigarette traffickers have been apprehended recently with cargos of up to 2 million illegal cigarettes.