Organized Crime Shifts to Counterfeiting Paraguayan Cigarettes Inside Brazil

Organized crime groups are increasingly establishing clandestine cigarette factories within Brazil to counterfeit brands from Paraguay. According to data from Ipec and the National Forum Against Piracy and Illegality (FNCP), 21 such factories were closed in the last two years. This shift aims to reduce transportation costs, avoid taxes, and minimize the risk of losing cargo during highway contraband operations. The illegal market currently accounts for 32 percent of cigarette consumption in Brazil.

Since 2012, 81 illegal industries have been shut down across 13 states. The majority of these operations are concentrated in the Southeast region, which saw 55 units, followed by the South with 13, the Northeast with 10, the Center West with 2, and the North with 1. In the state of São Paulo alone, 28 factories were identified in cities including Ribeirão Preto and Ourinhos.

Authorities have linked these operations to labor exploitation. In July of last year, a Public Labor Ministry operation in Ourinhos rescued 14 Paraguayan workers who were subjected to conditions analogous to slavery. These workers were brought into Brazil via Guaíra, Paraná, and were kept in unsanitary housing with minimal food. The factory involved in that specific case had an estimated production capacity of 60,000 packs per day.

Experts note that the high tax disparity drives this trade. Cigarettes in Paraguay face a tax load of 18 percent, compared to rates between 70 and 90 percent in Brazilian states. This price difference makes foreign brands highly attractive to consumers. Edson Vismona, president of the FNCP, stated that the presence of Paraguayan cigarettes results in annual tax evasion exceeding 7 billion reais. He added that the phenomenon extends across Latin America, affecting countries such as Argentina, Uruguay, Bolivia, and Chile.