Philip Morris on the illicit tobacco market: isolated raids by the State Security Service are not enough to solve the problem
This was stated by Artem Konik, CEO of Philip Morris Ukraine.
According to him, the state loses around 28 billion hryvnia annually due to the illegal cigarette market and a further 10 billion hryvnia due to the illegal trade in vapes.
“That’s almost one billion dollars a year. We’re talking about money that is lacking for the war effort, the economy and other critically important state needs,” said Artem Konik.
He also drew attention to the problem of illegal vape shops reopening after law enforcement inspections – 70% of such outlets resume operations within a week of being shut down.
“If you go there seven days later, you’ll see they’re open again. It looks like we’re fighting ourselves,” noted the CEO of Philip Morris Ukraine.
In his view, the illegal tobacco market can be overcome. As an example, Artem Konik cited 2024, when the share of the illegal market fell from around 25% to 12.6%.
“And the state was able to demonstrate results. Many steps were taken, and the level of illegal products fell significantly. And, I think, that was the only year I can remember when the legal industry even showed growth. It was a real miracle. But it demonstrated the main point: if there is a will, results can be achieved very quickly,” he emphasised.
Konik’s position was supported by Andriy Gunder, President of the American Chamber of Commerce in Ukraine (AmCham). According to him, four tobacco factories in Ukraine continue to operate illegally, selling their products under the guise of duty-free status.
“We can see exactly how much money is being stolen from the tobacco market today: $600 million – that’s a huge amount!” added Andriy Gunder.
According to the AmCham president, investors are primarily looking for markets with the same rules for all participants.
“They are looking for the rule of law. They are looking for a market where the rules are the same for everyone,” he stressed, emphasising that the success of the fight against the shadow economy determines not only budget revenue but also the country’s overall well-being.
As previously reported by ThePublic, MP Danylo Getmantsev stated that parliamentarians are dissatisfied with the slowdown in the de-shadowing of the economy, and that instead of delivering tangible results, the Economic Security Bureau is “feeding” the public with presentations and manipulating figures in its reports.
