From smuggling to spin: how tobacco giants hijacked the illicit trade debate

Since the announcement of the generational smoking ban in October 2023, tobacco industry lobbying efforts have gone into overdrive, with the i reporting that the tobacco industry has been “inundating MPs with lobbying material in a bid to persuade them to oppose the changes.” Just as with industry arguments against plain tobacco packaging, much of this lobbying – both in parliament and in the media – has centred on the illicit tobacco market. For example, Japan Tobacco International (JTI) has baselessly claimed that “escalating tobacco duty has contributed to the rapid growth of [the] black market” and that “the problem will only get worse if the Government proceeds with the proposed generational smoking ban.”

It’s one of the oldest tricks in the industry playbook: cry wolf about illicit tobacco every time new regulations are proposed and use it to further their lobbying efforts. In the last 12 months we’ve seen a new illicit tobacco campaign from JTI (featuring a website inviting MPs to request a meeting and a letter template members of the public can send to their MP), a report from Philip Morris claiming that the UK has the third biggest illicit market in Europe (it doesn’t), undercover sting operations, and op eds by representatives of industry-linked groups like the Institute of Economic Affairs (which does not publicly disclose its funding sources but has a long and recent history of receiving industry funding).

But why are the industry and their allies lobbying so hard on this now and are they right about the illicit market?

A declining illicit market

Contrary to industry claims, the illicit market in the UK is not “out of control” and has declined significantly over the last two decades. HMRC data shows that, between 2000-01 and 2023-24, the number of illicit cigarettes consumed in the UK declined by almost 90% – amounting to 13 billion fewer illicit cigarettes consumed per year by 2023-24 – alongside a 68% decline in illicit hand-rolling tobacco (HRT). During this time, the duty gap (the amount of tax revenue lost due to the illicit trade) has fallen from £2.5bn to £1.4bn.

UK illicit market for cigarettes and HRT (2000-01 – 2023-24)

_{Source: HMRC. Measuring tax gaps tables. June 2025}

Tobacco manufacturers argue that HMRC underestimates the scale of the problem and point to their own research which consistently shows a booming illicit market. However, tobacco industry data on the illicit trade has been widely discredited by independent experts, with one review finding that industry research overestimated the size of the illicit market by between 17% to well-over 100%, depending on the country in question. The authors concluded that: “The primary purpose of tobacco industry-funded data on the illicit tobacco trade seems to be to serve as a platform for the industry’s lobbying and public relations strategies.”

Tobacco taxation and the illicit trade

Tobacco companies have consistently argued that rising tobacco taxes are the main culprit fuelling the illicit market. In June 2025, a representative of tobacco giant, Imperial Brands claimed that: “we have now reached a tipping point where not only has tobacco excise become a volatile, poor-quality revenue stream, it is also no longer an effective deterrent.”

In reality, tobacco taxes are considered the single most effective way to reduce smoking rates according to the World Bank and WHO.

If the industry’s argument is correct, then that would mean that countries with lower rates of tobacco duty have smaller illicit markets – because smokers have access to cheap legal tobacco – while countries with higher taxes would have bigger illicit markets. However, a 2019 World Bank report featuring input from international experts found that the opposite is true – the illicit market is “relatively larger in countries with low taxes and prices, while relatively smaller in countries with higher cigarette taxes and prices.” They concluded that prices and tax rates had a much smaller impact than effective enforcement, regulation and supply chain controls.

This is clear when we look at the UK. If there was a direct link between tobacco duty and illicit trade, then the UK black market should have been tiny in the 1990s when taxes were low and then grown steadily as taxes rose. But if we look at trends in the illicit market since then, we see the exact opposite. The number of illicit cigarettes consumed in the UK has fallen by almost 90% since the turn of the century, while the price of an average pack of cigarettes has more than tripled.

How is this possible? Because since 2000, the UK government has pursued an effective enforcement strategy against the illicit trade, alongside measures that have significantly reduced smoking rates – cutting demand for both legal and illegal tobacco.

Cigarette prices and illicit market volume in the UK (2000 - 2023)

_{Source: HMRC. Measuring tax gaps tables. June 2025; ONS. RPI: Ave price - Cigarettes 20 king size filter. June 2025.}


Creating a smokefree generation

The Tobacco and Vapes Bill, currently going through parliament, will introduce a ‘generational smoking ban’ by prohibiting the sale of tobacco to anyone born after 2008 (currently aged 16 or younger). It is estimated that this will reduce smoking rates among 14-30 year olds to near-zero by 2050, permanently closing the door on the tobacco epidemic and saving an estimated 150,000 lives by 2100. This presents an existential threat to tobacco industry profits – £900 million a year in the UK as of 2018 – which is why they are aggressively lobbying the government to raise the age of sale to 21 instead.

But tobacco company lobbyists can’t say ‘we oppose these measures because they will lead to fewer people smoking and cost us money’ – due to overwhelming public support for anti-smoking measures. So instead they feign concern about the illicit market, enforcement and retailers’ wellbeing – this from an industry that lied about the harms from cigarettes well into the 1990s and is responsible for nearly 8 million deaths in the UK over the last 50 years.

Shaping the narrative

Despite their historic role enabling tobacco smuggling to the UK (and around the world), tobacco companies have adopted a highly effective strategy to turn “the issue of cigarette smuggling from a PR disaster into a PR triumph”, where they claim to be both the victim of the illicit trade and part of the solution. This has been largely successful. Illicit tobacco is one of the few subjects where tobacco companies are seen as credible voices, with the industry dominating the media narrative on the illicit trade.

The real threat to tobacco industry profits is not the black market – which evidence suggests they continue to facilitate and profit from across the globe – it is falling smoking rates. This is why they continue to do everything they can to lobby against tobacco regulations. Faux concern about illicit trade is one of many cynical tactics the industry uses to further their lobbying efforts.

Staying vigilant

However, we must not be complacent. Despite significant progress in combatting the illicit market in the UK, it has not been eradicated. The illicit tobacco trade has strong links with organised crime and sellers often target children, making it easier for them to get hooked on a lethal addiction. Illicit tobacco also undermines the impact of lifesaving public health measures by reducing the incentive to quit smoking.

The pandemic and cost of living crisis have both disrupted smoking behaviour and it is possible that some people, particularly those on lower incomes, may seek out cheaper, illicit alternatives (although the evidence is clear that the vast majority of smokers do not buy illicit – contrary to misleading industry claims).

This is why continued investment in enforcement is so important to disrupt the illicit supply chain and limit access to black market products. In 2024, HMRC announced a new 5-year illicit tobacco strategy supported by £100 million in funding. This is in addition to an extra £10 million a year for illicit tobacco and vapes enforcement led by trading standards. This funding will be vital for stepping up efforts to tackle the illicit trade.

But well-worn tobacco industry arguments that regulations or taxes will explode the illicit market must be taken for what they are – the desperate attempts of a dying industry to prolong its existence. The best way to end the illicit trade in tobacco products for good is to support the 6 million smokers in the UK to quit and create a smokefree generation.

For more information about tobacco industry tactics see the Tobacco Tactics website.