STAMFORD, CT -- Philip Morris International (NYSE: PM) emphasizes the importance of effective policymaking in responding to the growing illicit tobacco trade in the Region of the Americas (excluding the United States), where almost one out of every three cigarettes consumed across 11 countries in the region comes from illegal sources.

The results of the study, conducted by KPMG LLP on behalf of Philip Morris Products S.A., reflect that illicit trade is a defining feature of the regional cigarette market. In 2025, an estimated 77 billion illicit cigarettes were consumed across the region, representing 31.9% of total cigarette consumption. The scale of illicit trade highlights the growth of an unregulated parallel economy: the Region of the Americas (excluding the U.S.) has the highest rate of illicit cigarette consumption worldwide, with an incidence more than twice the global average of 15%, according to PMI internal estimates based on industry reports and third-party research studies.

“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, Latin America & Canada. “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.

Illicit consumption remains resilient and structurally high across the region, showing that extreme regulations and steep and abrupt tax increases can boost the illicit tobacco trade.

While some governments across the region have imposed heavier taxes and regulations on tobacco products, the current state of illicit trade in the region shows that demand for cheaper products is not disappearing. Instead, it is shifting toward illegal markets, where consumers can find a wide array of illicit cigarettes.

The implications extend beyond the tobacco sector, as the report estimates that illicit cigarette consumption resulted in an estimated USD 8.5 billion in lost tax revenues across the region in 2025.

“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,” said Hannappel.

Illicit trade is not only a fiscal issue - it is also a public health, security, and institutional challenge. Illegal products bypass controls, expose consumers to unknown risks, and weaken the effectiveness of regulation.

In several countries, illicit trade has reached levels that displace the legal market. Brazil remains the largest illicit cigarette market in the surveyed region by volume and fiscal impact, while in countries such as Panama and Ecuador illicit products account for more than 80% of consumption, illustrating how illicit trade expands when enforcement, regulation, and market conditions fall out of alignment.

Philip Morris Products S.A. commissioned KPMG LLP to develop the analysis to contribute data-driven evidence to policymakers, stakeholders, and enforcement authorities across 11 markets in the Region of the Americas, with the aim of supporting more informed public discussion and more effective policy and enforcement responses.

The 11 countries studied for this analysis are Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Mexico and Panama.