The shadow market for tobacco and vapes costs the budget 38 billion hryvnias annually – Philip Morris
Ukraine loses approximately 38 billion hryvnia annually due to the illegal trade in tobacco products and vapes. This was stated by Philip Morris, which noted that raids and inspections alone are not enough to combat the black market. According to the company, most retail outlets shut down by law enforcement resume operations just a week after inspections.
According to Konik, the latest actions by the Economic Security Bureau indicate an intensification of the fight against the illegal market. Specifically, this refers to the dismantling of a large illegal factory in Chernivtsi and large-scale operations against the illegal trade in vapes.
“Of course, we support this. It’s a positive development for the country. But these shouldn’t be one-off actions. This kind of work needs to be done every day so that the state collects its taxes and the rules are enforced,” Konik noted.
At the same time, he emphasized that isolated raids and searches are insufficient for a systematic solution to the problem.
According to estimates by Kantar Ukraine, about 90% of the vape market in Ukraine is in the gray market. The state loses about 28 billion UAH annually due to the illegal cigarette market and another 10 billion UAH due to the illegal trade in vapes.
“That’s nearly one billion dollars a year. We’re talking about money that’s missing for the war, the economy, and other critically important state needs,” Konik said.
Separately, the CEO of Philip Morris Ukraine drew attention to the problem of illegal retail outlets reopening after law enforcement inspections.
According to him, about 70% of such outlets resume operations within a week of being shut down.
“If you go there seven days later, you’ll see that they’re open again. It looks like we’re fighting ourselves,” he noted.
Konik also stated that illegal vape retail outlets continue to operate even in large shopping and entertainment centers.
In his view, the key to successfully combating the shadow economy is political will and addressing the root causes of the illegal market.
“You can fight mosquitoes in a swamp endlessly. But it’s much more effective to drain the swamp itself. Then the problem will disappear,” Konik believes.
Philip Morris Ukraine noted that the effectiveness of the fight against the illegal market depends on the coordinated efforts of the state, law enforcement agencies, and society.
“In 2024, there was both political will and political pressure regarding the need to combat the illegal market. And the state was able to demonstrate results. Many steps were taken, and the level of illegal products decreased significantly,” emphasized Artem Konik.
According to him, the share of the illegal market in Ukraine decreased from approximately 25% to 12.6% during 2024.
He also cited the example of the fight against a network of slot machine parlors in Ukraine, when people said it was impossible to defeat them because too many people were involved in these schemes.
“But as soon as the political will emerged, the situation changed dramatically. Today, you no longer see this phenomenon on the same scale as just a few years ago. Many of these establishments have now been replaced by entirely different businesses,” said the head of Philip Morris Ukraine.
Konik cited Moldova as a specific example, a country that had long suffered from an illegal cigarette market but was able to make significant progress after adopting the necessary legislative measures and ensuring the political will to implement them.
“It used to seem to me that achieving such a result was simply impossible. But today it is a reality,” Konik noted at the NV publication’s event.
Earlier in Kharkiv, illegal tobacco business schemes with a turnover of tens of millions of hryvnias were dismantled.
