London’s Illicit Tobacco and Vape Market Fuels Organised Crime – New Data Released Today

• Undercover operation reveals over half of targeted stores found selling illicit products
• Violent crime and youth use linked to illicit trade are higher in London’s poorest areas
• UK third for illicit tobacco use among 38 European countries; 1 in 4 cigarettes is illicit
• Cost-of-living and demand for cheaper products are driving forces behind soaring illicit use
• Calls for balanced policies to protect access to regulated e-cigarettes and heated tobacco

New data reveals serious and organised crime in London is being fuelled by the black-market trade in illicit disposable vapes and cigarettes, according to one in three convenience store owners.

The data[i], from KAM and commissioned by Philip Morris Limited (PML), reveals that youth tobacco and vape use, violent crime, and money laundering linked to the illicit trade are higher in London’s poorest communities. The cost-of-living crisis is seen as a contributing factor, with half of all shopkeepers citing economic hardship and the demand for cheaper products as drivers of illicit use.

Retailers in London are calling for immediate action to tackle the issue, including:

• Stronger law enforcement (72%) and harsher penalties for offending retailers (76%),
• Police powers to shut down rogue stores (84%),
• Better access to regulated smoke-free alternatives like e-cigarettes and heated tobacco (72%),
• Additionally, nearly 40% doubt that illicit use will drop by 2030ⁱ, England’s smoke-free goal, and seven out of ten are committed to supporting anti-illicit product efforts.

These insights coincide with a newly published KPMG report, commissioned by Philip Morris International (PMI), which highlights the national scale of the problem. The UK ranks third among 38 European countries for illicit tobacco consumption[ii]. Nationally, while overall cigarette consumption has decreased, the use of contraband and counterfeit cigarettes is rising, with one in four cigarettes smoked now illicit [iii].

Regional data shows significant variations^*, with 11 out of 12 UK regions reporting an increase in illicit tobacco consumption compared to the previous year[iv]. Scotland saw the sharpest rise, with one in three cigarettes now illicit—a 20% increase in just one year, the highest in the UK[v]. In London, illicit cigarette use has surged by 109% since 2020[vi], with one in four cigarettes now illegal[vii].

In a recent two-day undercover operation led by former Scotland Yard Detective Chief Inspector Will O’Reilly, over half of the 60 London stores visited were found selling illicit cigarettes and disposable vapes. “This is a pattern I’ve observed across the country, with stores selling dangerous illicit cigarettes and vapes” O’Reilly reported. “Eliminating the illegal cigarette market alone could strip organised crime of profits equivalent to funding over 115,000 new police officers[viii].”

These trends underscore the critical need for balanced policies that protect adult smokers’ access to regulated smoke-free alternatives—such as e-cigarettes and heated tobacco products—while preventing people from being driven toward dangerous illicit products.

Duncan Cunningham, Director of External Affairs at PML, stated, “The illicit tobacco and vape trade poses a direct and serious threat to public health, preying on deprived communities and driving youth uptake. With the UK already among Europe’s largest illicit cigarette markets, we must strike a careful balance: safeguarding people, especially youth, from harmful illicit products, while ensuring adult smokers have access to smoke-free alternatives.”

He concluded, “To truly achieve a smoke-free future, we must protect future generations and support the 6.4 million adult smokers in the UK by maintaining access to regulated alternatives that have already helped millions switch away from cigarettes.”

Kamlesh Rathod, a London retailer affected, now views the illicit tobacco and vape trade as a major part of the broader retail crime crisis currently gripping the UK.

“Retailers bear the brunt of the illicit tobacco and vape market, just as they do with shoplifting and in-store violence.  While Trading Standards are seen as the primary solution in tackling this issue, the role of retailers is often overlooked. With better support, we could raise awareness of the dangers of illicit products and guide adult smokers toward legal alternatives,” Rathod concluded.

Counterfeit & Contraband (C&C) % by region (KPMG):

The Cost of Illicit Cigarette Trade in the UK

The tax revenue lost due to illicit cigarette trade could cover the costs of significant national expenses, including:

• Hiring 124,651 nurses for the NHS[ix].
• Abolishing the two-child limit on welfare benefits[x].
• Funding a full year of both Great British Energy and the National Wealth Fund[xi].

Additional KAM data insights from London’s retailers:

• Regulatory Concerns: Over half (52%) of the retailers fear that higher taxes on legal products might boost the illicit market. Similarly, 44% are concerned that restrictive regulations on legitimate alternatives could inadvertently increase illicit activityⁱ.
• Community Involvement: Retailers are committed to supporting anti-illicit product efforts, including purchasing from legitimate sources (85%) and reporting illegal activities (78%)ⁱ.
• Effective Messaging: The most impactful message to help tackle the illicit trade, according to all surveyed retailers, emphasises the community harm caused by illegal products, resonating more in lower-income areas (35% vs 29%)ⁱ.

[i] Research was conducted by KAM, an independent consultancy, via a telephone survey with 201 Symbol and Unaffiliated Independent Convenience Store Retailers in April 2024. The sample included retailers from boroughs above (101) and below (100) the London poverty average. Boroughs above the average included Westminster, Camden, Tower Hamlets, Newham, Ealing, Wandsworth, Enfield, Haringey, Brent, and Lewisham. Boroughs below the average included Harrow, Waltham Forest, Hillingdon, Kingston, Sutton, Greenwich, Hammersmith, Bromley, Havering, Merton, Richmond, Southwark, and Islington. Poverty data was sourced from Trust for London, based on 2021/2022 rates. The data was derived from the Office for National Statistics, Social and Vital Statistics Division, NatCen Social Research, and the Department for Work and Pensions, according to the Family Resources Survey and Households Below Average Income datasets. Note: Poverty is defined as below 60% of median household income after housing costs (AHC). The indicator uses a 5-year pooled sample excluding 2020/21 data due to sample bias concerns.

[ii] Illicit cigarette consumption in Europe. Results for the Calendar Year 2023. KPMG. (09 September 2024) KPMG report – Illicit Cigarette Consumption in Europe – 2023 Results (pmi.com)

[iii] Ibid

[iv] Ibid

[v] Ibid

[vi] Ibid

[vii] Ibid

[viii] Estimate based on the average starting salary for a police constable, which is £29,000 (National Careers Service), and the total revenue loss from the illicit tobacco market, calculated at £3.37 billion (KPMG, 2023). By dividing the total lost revenue by the starting salary, the potential funding for approximately 115,000 police officers is derived.

[ix] Estimate based on the cost of a newly qualified nurse who has registered with the Nursing and Midwifery Council, which is £27,055 (NHS Health Careers), and the total revenue loss from the illicit tobacco market, calculated at £3.37 billion (KPMG, 2023). By dividing the total lost revenue by the representative starting salary, the potential funding for approximately 124,561 nurses is derived.

[x] Estimate based on the cost of abolishing the two-child limit and benefit cap in 2024-25, stated as £3bn in the Resolution Foundation’s January 2024 report ‘Catastrophic caps: An analysis of the impact of the two-child limit and the benefit cap’. The total revenue loss from the illicit tobacco market is calculated at £3.37 billion (KPMG, 2023).

[xi] Estimate based on the costings taken from Labour’s fiscal plan, published as part of the Labour Party Manifesto for the 2024 UK General Election. This estimates annual average cost of Great British Energy at £1.7bn and the National Wealth Fund at £1.5bn for a total of £3.2bn. The total revenue loss from the illicit tobacco market is calculated at £3.37 billion (KPMG, 2023).