Rise of Illegal Tobacco Trade in Ukraine

As of early 2026, the total level of illegal tobacco trade in Ukraine stands at 17.6%. This data was obtained from the project "Monitoring Illegal Trade in Tobacco Products in Ukraine," conducted by Kantar Ukraine at the request of leading industry manufacturers.

According to the report from Kantar Ukraine, nearly one in six cigarette packs in the domestic market is illegal. Analysts have calculated that with the shadow market in Ukraine estimated at around 5 billion cigarettes, the annual losses to the state budget due to unpaid taxes reach a staggering 28.1 billion hryvnias.

"At the beginning of 2026, the share of counterfeit products with fake excise stamps decreased to 9.0%. At the same time, there is a noticeable increase in the share of products marked as Duty Free or intended for export, which has reached 7.7%," the Kantar study notes.

Researchers found that 37% of counterfeit products consist of cigarettes with fake excise stamps. The main producer of such cigarettes, according to the labeling on the packaging, is Marshall Finest Tobacco (United Tobacco) / VK Tobacco FZE. Among the illegal products marked as Duty Free or intended for export, 57% are produced by the Vynnyky Tobacco Factory, as indicated on the packaging.

Geographically, 67% of the total volume of illegal tobacco products is concentrated in seven regions of Ukraine. This year, the Kirovohrad region has been added to the list of the most problematic areas, indicating an expansion of the illegal tobacco trade issue in Ukraine.

The project "Monitoring Illegal Trade in Tobacco Products in Ukraine" is implemented by Kantar Ukraine on a continuous basis. The research is based on the collection and analysis of empty cigarette packs, as well as conducting interviews with smokers to identify the channels of entry and origin of illegal goods in the domestic market.

Earlier reports indicated that at the request of the business community, the full launch of the e-Excise system has been postponed to November 1, 2026. This decision was made in response to numerous requests from representatives of the tobacco industry, who expressed concerns about the implementation of the new system.

In February 2026, Maxim Barabash, the General Director of Philip Morris Ukraine, stated that the rate of decline in the legal cigarette market is simply astonishing. This confirms the worsening situation in the market and the urgent need for measures to combat illegal trade.

Thus, the findings of the Kantar Ukraine study underscore the seriousness of the problem of illegal trade in tobacco products in Ukraine, which requires immediate action from the government and relevant regulatory bodies.