Organized Crime Shifts Illicit Cigarette Production Inside European Union

Illegal cigarette manufacturing is increasing across nearly every European Union member state as organized crime groups move production inside the bloc to be closer to consumers. A report from the European Court of Auditors (ECA) indicates that illicit manufacturing is overtaking traditional smuggling. Europol reports that the number of clandestine factories discovered across the continent rose nearly 80 percent from 2018 to last year, increasing from 47 to 83 sites.

Several factors have driven this shift. Europol attributes the change to stricter border controls along the eastern edge of the bloc following the Russian invasion of Ukraine. Additionally, rising tobacco taxes in markets such as France, Belgium, and the United Kingdom have made local production more profitable by widening the price gap between legal and counterfeit products. In France, where legal cigarettes can cost around 13 euros per pack, nearly one in five cigarettes consumed last year was counterfeit according to KPMG.

The scale of these operations is significant. One dismantled factory in Belgium employed 50 workers across four production lines capable of producing one million cigarettes per hour each. In Spain, police seized three million packs and five tonnes of raw tobacco during a raid on a facility that supplied six EU countries. The ECA notes that these factories often use sophisticated equipment and experienced technicians, typically operating for two to four months before relocating.

The economic and social impact is substantial. Estimates on tax losses vary between 13 billion and 16.7 billion euros annually. While one source notes that there is no evidence counterfeit cigarettes are more dangerous than legal brands, the ECA argues that the trade undermines public health policies by making tobacco more accessible to young people. The ECA further suggests that enforcement is hampered by a lack of harmonized European law and inconsistent information exchange between member states.