PM · 10-Q · 2026Q3 · Full report

Illicit Trade

Philip Morris International Inc. · 2026-10-23 · Importance 20 · Surprise 24

PMI estimates that illicit trade, including counterfeit, contraband and illicit whites, may represent as much as 16% of global cigarette consumption excluding China and the U.S.; in the EU, it exceeded 10% of cigarette consumption in 2025, mainly driven by counterfeit. PMI says illicit trade is increasingly targeting smoke-free products, and the commercial success of nicotine pouches makes that category more exposed. Its response includes customer and anti-diversion controls, volume monitoring, tracking and tracing, product security, market monitoring, and actions against illicit resale through online and traditional trade channels. PMI affiliates may limit or terminate sales to customers involved in illicit trade of products bearing its brands.

Key facts

• EU tracking-and-tracing regulations were extended to tobacco products other than cigarettes, including some PMI smoke-free products, as of May 20, 2024. source
• PMI and Swedish Match affiliates are taking actions against illicit resale of their oral products, including nicotine pouches, outside intended retail markets such as Scandinavia and the U.S.; actions include cease-and-desist letters and limiting or terminating sales to certain customers. source
• The fourth Meeting of the Parties concluded in November 2025 with no restrictions decided regarding duty-free tobacco sales or whether the Protocol covers electronic nicotine and non-nicotine delivery systems; MOP5 is scheduled for 2027. source
• PMI expects governmental actions and diminishing social acceptance to increase down-trading and the risks of counterfeiting, contraband, illicit trade, and cross-border purchases. source
• PMI estimates illicit trade accounted for as much as 16% of global cigarette consumption, excluding China and the U.S. source
• PMI estimates illicit trade in the EU accounted for more than 10% of total cigarette consumption in 2025, mainly driven by counterfeit. source
• PMI believes Marlboro is the most heavily counterfeited international cigarette brand, but says it cannot quantify the resulting lost revenues. source
• PMI's revenues may be materially adversely affected by counterfeiting, contraband, cross-border purchases, non-tax-paid local-manufacturer volume, and other non-compliant or illicit cigarette or smoke-free products. source