Black market cigarettes now make up to 100 per cent of sales at the flourishing high street tobacco stores opening up across the country, a Daily Mail Australia probe has found.
Now fears are growing the savage firebomb wars between organised crime gangs in Victoria that have targeted the lucrative tobacco trade are spreading north to NSW.
But shopkeepers say they have to sell the counterfeit packs in order to survive as the cost of legal cigarettes prove prohibitive,
And they claim while the threat of mobsters and standover men may be real, they have nothing to fear from the authorities who ignore the illegal cigarette trade.
On Friday, NSW Police released CCTV footage of several attacks on tobacconists, including a ram raid and two arsons.
The black market trade is run by criminal groups who are engaged in tit for tat violence, and use the profits to fund other illegal activities.
In Sydney the illegal cigarettes are seemingly now available on every street corner.
Daily Mail Australia visited three tobacconists at random in the inner-west this week to find out what was really on offer under the counter.
One tobacco shop offered packs of Chinese-branded Double Happiness for $15 and Manchester for $20.
Now fears are growing the savage firebomb wars between organised crime gangs in Victoria which have targeted the lucrative tobacco trade are spreading north to NSW
The magic phrase ‘What is your cheapest pack of cigarettes’ saw the shopkeepers reach for the untaxed brands which are hidden from view inside the stores.
All of them were selling black market tobacco, although some were more open about it than others.
One seller said he did not offer any taxed products at all.
‘We do sell Benson and Hedges, but they’re the $20 ones,’ they added.
In a cardboard tray behind the counter, he had packs of Double Happiness for $15, as well as Manchester and other counterfeit brands for $20.
He was also selling 50g pouches of tobacco for $25.
He said he didn’t bring the cigarettes into the country himself and were imported from countries like the United Arab Emirates and China by a third-party ‘distributor’.
He said he risked a hefty fine if he sold vapes, but he insisted the untaxed cigarettes were ‘fine with the police’.
Although police sometimes confiscated the cigarettes from tobacconists, he said he did not know of any fines ever being imposed, and even the seizures were rare.
Another owner was selling Manchester for $20 and Double Happiness for $16, with the packs kept in a back room.
‘These ones are from Dubai,’ he said of the Manchester brand.
Even though his shop had a large cabinet full of legal tobacco, he said that the illegal cigarettes – which don’t carry the Australian health warnings or plain packaging – accounted for 95 per cent of his business.
But he admitted he was worried about a new law requiring warning messages on every individual cigarette from March 31 next year.
He said the law may force him to dispose of huge quantities of stock, worth $500,000.
A third owner, when asked for cheap cigarettes, first offered legal cigarettes from his cabinet, but upon being asked for something even cheaper, he took a $20 pack out of a drawer.
None of the sellers would say who was distributing the cigarettes, but police say organised crime lies behind the insidious distribution network.
In shocking footage released on Friday, ramraiders are shown driving a stolen car into the front of a shop, destroying several displays and stealing large amounts of cigarettes.
The same tobacconist was rammed again a month later before two men poured fuel inside the business and fled without setting it alight.
The following night, another tobacconist in a nearby town was set alight in the seventh arson attack across NSW since March 2023.
NSW Health is the lead agency trying to tackle black market tobacco in Sydney. Daily Mail Australia is not suggesting any criminality at the store pictured
It follows 114 arsons in Victoria linked to Middle Eastern-organised crime syndicates and outlaw motorcycle gangs.
The Federal Government committed nearly $200 million to curbing illicit tobacco earlier this year, but it’s the state and territory governments which decide how to restrict retailers.
Both Victoria and NSW dialled up efforts this week to reduce the trade, force retailers to be licensed and increase fines for dodgy traders.
Under proposed laws, vendors in Victoria will also have to pass a fit-and-proper-persons test and can be refused a licence based on their history and associates.
Similar provisions were proposed by the NSW opposition but not supported by the state’s Labor government in parliament this week.
Both major parties backed substantial increases to illegal tobacco fines, expected to take effect in the coming months.
The NSW Health department is the lead agency trying to tackle black market tobacco in the state.
While police assist with any health inspections or seizures, it is the NSW Health inspectors who issue the fines.
A tobacco industry source said that the black market flourishes whenever Federal Health Minister Mark Butler announces a new crackdown.
Manufactures had only been given five months to reconfigure their supply chains in response to the latest law.
That might not be enough time to roll out the cigarettes with the new warnings, leaving the entire tobacco market in the hands of organised crime.
‘This push will lead to only one outcome: black market crime increasing and lost excise revenue,’ the source said.
‘It shows a clear disconnect between the Albanese Government and the realities of running a business.
‘If manufacturers are unable to meet the March 31 deadline, Australia will see a period where not a single legal cigarette is available on shelves, leaving consumers with no option but to turn to the black market.’
It’s up to state and territory governments to decide how to restrict retailers
The black market trade is run by criminal groups who are engaged in tit for tat violence, and use the profits to fund other illegal activities
Theo Foukkare, CEO of the Australian Association of Convenience Stores, agreed that the law risked driving even more Aussies to smoke unregulated cigarettes.
‘We support the health warnings but the federal government is making this far more complicated than it needs to be, with a timeframe that is simply not realistic.
‘That’s why we want them to adopt the Canadian model, where this important change has been phased in over 18 months.’
Daily Mail Australia has contacted NSW Health, and Federal Health Minister Butler, for comment.
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