Growth after the fall: the illegal tobacco market is recovering again
7 April 2025 14:21
After a year of gradual decline, in February 2025, the illegal tobacco market in Ukraine showed growth again – up to 14.1%. This is evidenced by the data of the project “Monitoring of the Illegal Trade in Tobacco Products in Ukraine” conducted by Kantar Ukraine at the request of leading domestic tobacco manufacturers, "Komersant Ukrainian" reports.
The annual losses of the state budget of Ukraine are estimated at UAH 24.2 billion, and the volume of the shadow cigarette market in Ukraine is more than 5 billion units.
“There has been a noticeable increase in the share of illegal tobacco products labeled as Duty Free or exported, which are illegally sold in Ukraine. In February 2025, it amounted to 6.4%. We are also seeing more cases of counterfeiting, including counterfeit excise stamps. The market is once again demonstrating adaptability, and the structure of the illegal segment is changing quite rapidly,” comments Tetiana Sverdlyk, Kantar Ukraine analyst.
Products with counterfeit excise stamps
One third of counterfeit products – 33% – have signs of fake excise stamps.
Of this share, 25% (according to the inscription on the package) are indicated as manufactured by Marshall Finest Tobacco/United Tobacco/VK Tobacco FZE.
Another 8% of such products have “Ukrainian Tobacco Production” as the manufacturer.
Illegal products under the cover of Duty Free
55% of illegal products are labeled as Duty Free or are intended for export and sold illegally in Ukraine.
According to the inscription on the packaging, such products are manufactured by Vynnykivska Tobacco Factory.
The main brands of this group are:
– Compliment (50%),
– Lifa (5%).
The remaining 45% of this illegal category is made up of products with an unspecified manufacturer. Among the most common brands:
– Marshall (25%),
– Urta (9%),
– Brut (6%).
Where counterfeiting is most active
The largest volumes of trade in illicit tobacco products are traditionally recorded in six regions, which together form 73% of the market for such products:
Dnipropetrovska oblast – 28%,
Odesa region – 16%,
Lviv – 9%,
Kharkiv region – 8%,
Kyiv and Kyiv region – 7%,
Khmelnytsky – 5%.
Where illegal cigarettes are most often sold
At the beginning of 2025, the majority of illegal tobacco products (68%) continue to be sold through kiosks and shops, a trend that has continued since last year:
– Kiosks – 39%,
– Stores – 28%,
– Street trade – 14%,
– Open markets – 11%.
What is the official reaction to the growth of illegal trade?
Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, states that the results are unfortunately disappointing.
“The illegal market has partially played its part despite the hard work of the State Tax Service and the BES in 2024, when the illegal market decreased by a third. I demand an immediate response from the State Tax Service and the BES. It is very easy to lose those victories over the shadow that were so hard for us!” the official emphasized.
Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, also announced a meeting of the relevant committee.
