FILE PHOTO: Illegal produced cigarettes are seen during a news conference of German customs (Zoll) in Cologne, Germany, August 25, 2020. REUTERS/Stephane Nitschke/File Photo

LONDON (Reuters) -Tobacco smugglers and black market salesmen are increasingly using technologies such as social media and drones to deliver cigarettes to smokers in Europe and avoid law enforcers, a report by consulting group KPMG published on Wednesday found.

The report, produced annually and commissioned by Philip Morris International, looks at illegal consumption of cigarettes on the continent - which big tobacco companies say costs them sales and authorities say costs them tax revenues.

In 2024, KPMG found that almost 40 billion illicit cigarettes were consumed across 38 European nations, based in part on a study of empty packs collected in those countries. It also cited interviews with law enforcement.

The gangs' flexible strategies have helped to drive a 10.8% increase in illicit consumption versus 2023, according to KPMG, which also attributed the rise to higher taxes and prices in markets including France and the Netherlands.

The report said criminal groups had shifted towards smuggling smaller packages, more often, via budget airlines.

They are also making greater use of rail and drones, and are increasingly bypassing physical stores to sell directly to consumers on social media, it continued.

The more recent change in tactics follows another shift from 2020, when the groups moved production closer to end-markets, partly in response to the pandemic disruption, but also reducing the chance of detection.

KPMG said in 2024 the groups had also begun holding less inventory, which is reflected in a decrease in the size of illicit cigarette seizures as the gangs mitigate their risks and reduce the impact of raids by law enforcers.

Big tobacco companies say tax increases have driven growth in illicit cigarette consumption.

Public health campaigners and institutions such as the World Bank, however, have said such claims are overblown and that high taxes can support public health by reducing tobacco consumption, while generating revenues for governments.

(Reporting by Emma Rumney; editing by Barbara Lewis)