bat new zealand - About illicit trade

When consumers light-up a smuggled or counterfeit cigarette, keen to save money, they may be unwittingly helping to fund international organised crime.

This is just one serious problem associated with the trade in illicit tobacco – a trade which is already a global problem and set to grow.

The black market is mainly fuelled by ever higher taxes which encourage consumers to switch to cheaper illicit products and also provide criminals with ever greater rewards.  Weak criminal penalties, poor border controls, low arrest rates and corruption in some parts of the world add to the problem.

Scale of the problem

British American Tobacco estimates that globally some 330-660 billion cigarettes smoked each year are illegal - counterfeit and genuine products that are smuggled.  This is approximately 6-12 per cent of total world consumption.

You can find a global snapshot of illicit trade incidence and more information on the Group's website.

Illicit trade blows big holes in governments’ budgets. The cost in lost tobacco taxes worldwide each year is estimated at US$20-40 billion. The actual sum will be higher still as smugglers don’t declare their earnings for income tax either. 

Legitimate tobacco companies are also losing some US$5-10 billion per year, investment in brands, jobs and distribution networks is also undermined.

Consumers, who may think they are getting a bargain, end up buying counterfeit products of dubious quality, which do not conform to local regulations. 

Rules to prevent sales to children at the shop counter are also undermined by illicit sales away from the eyes of the authorities.

Crime and reward

Illicit trade is not just the work of small operators – organised crime is increasingly dominant. 

The rewards can be high.  For example, a single 40 foot long container (8.5 million cigarettes) smuggled into the UK and sold at half the recommended retail price could net the criminals around US$2 million in profit.

Interpol, the international police organisation, says gangs that traffic drugs, arms and people are also the ones behind the illicit cigarette and alcohol trade.  The US Department of Justice says some also have ties to terrorist organisations.