Cigarettes, cigars, and rolling tobacco are losing market share to smokeless products. This is confirmed by the Report on the Distribution of smoke-free and smoke-free products 2026 presented by Logista, in partnership with the Tor Vergata Foundation, on the occasion of the event "Logistics and distribution at the service of the country".
Traditional vs. combustion-free products
The report shows how, while maintaining a dominant position, traditional products such as cigarettes, cigars and rolling tobacco have reduced its market share in terms of volumes distributed at 70% from 85% in 2019. This change is mainly due to the new generation combustion-free products (e.g. Htp – Heated Tobacco Products), which, supported by industry investments, have almost 20% in 2025.
The tobacco market is worth 22 billion, prices have increased by 11% since 2019.
Despite the decline in traditional cigarettes, the overall market grew from 18,5 billion euros in 2019 to almost 22 billion euros in 2025. The decline in cigarette consumption is in fact accompanied by smokers' shift to new products. Revenue growth in smokeless products is driven by volume expansion and consumer conversion, while the decline in cigarette consumption is almost entirely offset by the increase in prices. prices, which have risen by 11% since 2019.
Smuggling is worth 1,2 billion
Logista, which conducted the study, moves over 80 million kg of products annually and pays approximately €15 billion in excise duties to the Treasury. The report also highlights the role of distribution in fight against illegalityThe Logista network has approximately 90 Transit Points and reaches 60 thousand points of sale in over 8 thousand municipalities. “The traceability system allows us to monitor products and counteract a market of smuggling estimated at around 1,2 billion euros," the study states, according to which the joint revision of the European Directives on Taxation (TED) and Tobacco Products (TPD) opens a delicate phase for the Italian supply chain. The TPD, which regulates ingredients and emissions, labeling, packaging, and traceability of tobacco and nicotine products, has introduced the categories of e-cigarettes and new-generation products in recent years. "The possible future proposal would instead aim to standardize the regulatory treatment of combustible and non-combustible products, a possibility that the Italian supply chain calls for reconsideration to preserve the current differentiation, which has ensured a comprehensive, balanced, and investment-friendly regulatory framework," Logista explains.
According to the estimates reported in the study, a shift in consumption towards the illegal market could lead to a reduction in tax revenue between 1,2 and 5 billion of euros. The distribution chain generates over 7 billion euros in added value and supports more than 7.400 jobs, while the entire supply chain, from agriculture to retail, employs over 300 people.
Comments
The presentation of the Study was introduced by Federico Rella, Vice President of Logista Italia, who stated: "The revision of the European TED and TPD Directives comes at a crucial time, with a market undergoing rapid transformation. It is extremely challenging to tackle two reforms of this magnitude simultaneously. This is why it is essential that Europe find a balance between health protection, economic sustainability, and the gradual nature of the measures, ensuring sustainable implementation times and methods for the supply chain. Overly rigid measures, such as increased excise duties or bans on entire product categories, risk having disruptive effects for our country, making production costs unsustainable, encouraging delocalization, and increasing the scope for smuggling."
Professor Pasquale Lucio Scandizzo, A member of the Tor Vergata University academic team, he stated: "The revision of European legislation should take into account the specificities of the various sectors within the industry. For cigars, inadequately calibrated tax measures risk impacting the sustainability of a manufacturing and agricultural supply chain deeply rooted in Italy. For cigars, for example, it is essential to be able to rely on a predictable regulatory and tax framework that is proportionate to the market's characteristics. Likewise, it is important to preserve the differentiated approach currently envisaged by the TPD, avoiding the automatic extension of measures designed for other categories. The challenge is to accompany the evolution of European legislation while recognizing the specificity of the products and the supply chains that produce them."
The issues that emerged from the Report were addressed in the opening remarks by Giorgio Mulè, Vice President of the Chamber of Deputies, and Maurizio Leo, Deputy Minister of Economy and Finance; and in the closing remarks by Claudio Durigon, Undersecretary of the Ministry of Labor and Social Policies, and Federico Freni, Undersecretary of the Ministry of Economy and Finance.
Two round tables were held afterwards. The first was also attended by Pasquale Frega, president and managing director of Philip Morris Italy, stated: "The Italian experience in regulating tobacco and nicotine products is a European best practice that demonstrates how clear rules protecting consumers and fiscal stability generate value for the country, investment, employment, and the sustainability of public finances, in a context of transformation based on technological innovation. A possible evolution of these rules is now being envisaged in Brussels: we believe it is important to maintain an approach consistent with the cornerstones of the current regulatory framework for the sector, based on the differentiation between cigarettes and innovative products. As a leader in Italy and Europe in the field of innovative, non-combustible products, we hope that any development at European level will be appropriately assessed for all its possible systemic impacts on citizens and on a supply chain of excellence for Made in Italy products, without compromising Italy's competitiveness, exports, and innovation, but preserving a regulatory system that—like the Italian model—has proven its effectiveness and flexibility over time."
