STAMFORD, Conn. — Nearly one in three cigarettes consumed across Latin America and Canada in 2025 came from illicit sources, underscoring the scale of the illegal tobacco market in the region, according to a new industry-backed analysis.
The report, conducted by KPMG on behalf of Philip Morris Products S.A., found that 31.9% of all cigarettes consumed across 11 countries in the region were illicit. In total, an estimated 77 billion illegal cigarettes were consumed during the year, resulting in approximately $8.5 billion in lost tax revenue.
Researchers said the Region of the Americas, excluding the United States, now has the highest rate of illicit cigarette consumption globally—more than double the worldwide average of about 15%.
“Reports like this are relevant not only to highlight the illicit cigarette trade problem, but also to invite authorities to search for solutions, which promote technological innovation, intelligence gathering, and data-driven action,” said Marco Hannappel, President for Latin America and Canada at Philip Morris International. “Philip Morris International believes partnering with governments can help tackle this problem, and that balanced regulations allowing commercialization of new smoke-free products can end smoking, which would in turn indirectly decrease illicit cigarette trade,” he added.
The study found that illicit trade has remained persistent despite stricter regulations and higher tobacco taxes in many countries. Instead of reducing demand, researchers said those measures may be pushing consumers toward cheaper, unregulated products available on the black market.
The impact extends beyond public health concerns. The report estimates that billions in lost tax revenue could otherwise fund healthcare, education, infrastructure, and enforcement efforts.
“These are resources that could otherwise fund public goods such as healthcare, education, infrastructure, and enforcement capacity. Instead, they are captured by an illicit market,” Hannappel said.
Brazil remains the largest illicit cigarette market in the region, accounting for more than half of total illicit consumption across the countries studied. In Panama and Ecuador, illegal cigarettes dominate the market, making up more than 80% of total consumption.
The report also found that so-called “illicit whites”—cigarettes legally produced in one country but intended for smuggling into others—account for roughly 73% of the illegal market.
The findings were presented at an event in Washington, D.C., hosted by the Council of the Americas, where policymakers and industry experts discussed the need for coordinated enforcement and regulatory responses.
The study covered Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Guatemala, Mexico, and Panama.
