Latvia is taking on an increasingly significant role in Europe’s illegal cigarette production network, according to the latest study by the London-based international market research company Euromonitor International.
The study highlights that Latvia has historically been one of the main transit routes for cigarettes produced in Belarus and smuggled into Europe. However, Latvia’s role within international organized crime networks is gradually changing. In 2024, in particular, Latvia stood out for a sharp increase in the domestic production of counterfeit cigarettes.
Researchers note that since the early 2010s, organized crime strategies in the European Union have been shifting. The EU has evolved from being primarily a destination for smuggled cigarettes into an increasingly important center for the production and consumption of counterfeit cigarettes. As a result, criminal groups are changing their approach to Latvia—not just as a transit country, but as a location for production. This is evidenced by several large-scale illegal factories uncovered in recent years.
Stronger border controls, as well as sanctions against Russia and Belarus, have significantly reduced opportunities for cigarette smuggling into the EU. From 2023 to 2024, cigarette smuggling declined from 2.1 billion units to 1.5 billion units. In response, organized crime groups have shifted toward increasing counterfeit production within the EU itself.
Researchers emphasize that demand for counterfeit cigarettes is strongly driven by rising taxes
and newly introduced restrictions on tobacco and nicotine products.
Raids on large illegal factories have shown that their operators can earn up to 900 million euros annually. Meanwhile, the cost of setting up smaller illegal production facilities does not exceed 1 million euros, and such operations can pay for themselves within just one month.
The study estimates that in 2024 alone, approximately 14.9 billion euros in tax revenues (excise duty and VAT) were lost across the EU due to illegal cigarette consumption. For example, excise tax revenues in France have even declined over the past three years.
Although overall cigarette consumption in the EU decreased between 2015 and 2024, the volume of counterfeit cigarettes increased sharply. Counterfeit cigarette volumes grew by 14% annually, rising from 4.1 billion to 13.4 billion units in 2024.
France has the highest volume of counterfeit cigarettes,
with an average annual increase of 55.4% between 2015 and 2024. Across the EU, counterfeit cigarettes accounted for 31.3% of all illegal consumption in 2024.
The study identifies five countries—France, Hungary, the Czech Republic, Romania, and the Netherlands—as particularly prominent, together accounting for 68.5% of the total increase in counterfeit cigarette volumes in the EU between 2015 and 2024. France alone accounted for 57% of this growth, underscoring its major role in driving regional demand for counterfeit products.
Researchers also point out that wage growth in EU countries has not kept pace with inflation and rising prices of essential goods. This has led to a general decline in purchasing power, pushing consumers to seek cheaper alternatives, including switching brands or purchasing from different sources.
The rising cost of living has also increased tolerance toward counterfeit goods and illegal cigarettes. When legal cigarettes are two to three times more expensive, illegal products become highly attractive for consumers with limited budgets.
Euromonitor International is one of the world’s leading market research companies, founded in London in 1972 and specializing in the analysis of global markets, consumer goods, services, and economic trends.
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