June 30, 2011

Philip Morris International: Illicit Cigarettes In EU Reach Record Levels In 2010: KPMG Study Shows Annual Consumption Up By 5.1% To An Estimated 64 Billion Units

NEW YORK, Jun 30, 2011 (BUSINESS WIRE) -- Philip Morris International Inc. (PMI) (NYSE:PM)(Paris:PM) today announced results of a recent study showing that the illicit trade in contraband and counterfeit cigarettes in the European Union (EU) in 2010 reached its highest level since studies began in 2006.

The study, conducted by KPMG LLP (KPMG), estimates that annual consumption of illicit cigarettes increased by 3.1 billion units in 2010 versus 2009 to an annualized total of 64.2 billion units, equating to approximately 10% of total cigarette consumption in the EU. The loss to national and EU revenues due to cigarette smuggling is estimated by the European Anti-Fraud Office (OLAF) to be approximately 10 billion Euros per year.

KPMG has conducted this study every year as part of the landmark cooperation agreement between PMI, the European Commission and the EU member states. The results of these studies have been shared with the member states and OLAF.

Commenting on today's announcement, Timothy Lindon, PMI's Chief Compliance Officer & Vice President Brand Integrity, said: "While it is clear that law enforcement agencies in the EU are working hard to combat the problem, the study demonstrates that counterfeit and other illicit cigarettes continue to grow and are an increasing challenge to countries in the EU."

"The illegal cigarette market in the EU is now larger than the legal cigarette markets of France, Ireland and Finland combined, and brings increased criminality to EU member states, as profits from illicit trade are often used to fund other illegal activities, including drug smuggling, human trafficking and terrorism. In many EU countries, there are now two distinct cigarette markets, one legal regulated market which is declining, and an illegal unregulated market that is growing."

PMI is firmly opposed to the illicit trade in cigarettes and has undertaken a broad series of measures to combat this growing problem, including implementation of a global tracking and tracing system, comprehensive know-your-customer policies, consumer education and collaboration with governments. The key to success in this effort is local and international cooperation among numerous stakeholders, including governments, enforcement agencies, manufacturers and retailers, as well as a strong and globally-enforced protocol on illicit trade that addresses all forms of contraband and counterfeit tobacco products.

For more information on PMI's activities to combat the illicit trade in tobacco products, visit http://www.pmi.com/eng/tobacco_regulation/illicit_trade/pages/illicit_trade.aspx

Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world's top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI's products are sold in approximately 180 countries. In 2010, the company held an estimated 16.0% share of the total international cigarette market outside of the U.S., or 27.6% excluding the People's Republic of China and the U.S. For more information, see http://www.pmi.com.

SOURCE: Philip Morris International

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