With 12.1 billion cigarettes, we smoked five percent fewer cigarettes last year than in 2022, according to research by KPMG. However, this only affects the “Tschick” that was legally purchased and taxed in Austria. Domestic imports and counterfeiting are increasing, especially when it comes to smoking alternatives.
A total of 500 million glow sticks came to consumers tax-free. Mathematically, this means that every adult smokes three illegal packs per year. Alternatives such as tobacco sticks for stoves are also increasingly crossing the border with Austria. These are even properly purchased abroad, explains Özlem Dikmen, the new head of Philip Morris in Austria: “Almost 40 percent of tobacco sticks are not purchased in our tobacco shops. Consumers buy them across the border, because due to the long approval process, not all innovations and new varieties are immediately available here.”
If you add up all forms of ‘import’, the financial sector lost 110 million euros in taxes last year, and in 2025 alone that will probably be another 80 million, according to Dikmen. Sales figures are also under some pressure because the number of smokers is steadily decreasing by about one to two percent every year. Those who light up are increasingly turning to tobacco heaters, e-cigarettes, nicotine pouches and other alternative options.
They already account for almost 12 percent of turnover, “for the group this is already 38 percent, the target is even 50 percent. Of course, we would like to realize this more quickly in Austria.” No wonder, since tobacco heaters like “IQOS” already account for 40 percent of Philip Morris International’s gross profit.
The planned EU recommendation on a smoking ban in outdoor dining areas, also published by the “Krone”, is being scrutinized. “Austria is a tourist and host country, and there are also 4,600 tobacconists. Before introducing further regulations, you should first assess the economic consequences. It is a misconception that people no longer smoke, but simply stay at home,” Dikmen warns.
The illegal market is also growing throughout Europe. According to research by consultant KPMG, Europeans smoked 525.4 billion cigarettes last year. That was a minus of 2.6 percent. However, the share of counterfeit tobacco products or tobacco products not taxed in Europe has already risen to 52.2 billion, i.e. one tenth of the legal amount. This was an increase of 5 percent from the previous year and the highest value to date.
The tax loss increased even more sharply to an estimated 16.7 billion euros. The French are particularly responsible for this, as they already consume one in three cigarettes as counterfeit or contraband as a result of an increase in tobacco taxes. The British, Greeks and Ukrainians also focused considerably more on the gray and black markets.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
