Video footage reveals Adelaide stores selling illicit tobacco over the counter

A special investigation has caught numerous Adelaide stores selling illicit tobacco, or “chop chop”, over the counter – dodging huge fees, but risking jail time. See where the shops are.

Illegal tobacco is readily available over the counter at more than a dozen Adelaide stores, pumping millions of dollars into the illicit industry that often funds organised crime, authorities warn.

Footage obtained by The Advertiser has uncovered 14 stores across Adelaide where the illicit trade is rife, occurring in Blair Athol, Pennington, Ascot Park, Elizabeth South and Mile End.

Also referred to as “chop chop”, illicit tobacco is sold lose but unlabelled, and is grown or produced without the payment of custom duties.

Contraband, or illicit cigarettes, are manufactured legally outside of Australia but are not compliant with Australian regulations and are smuggled into the Australian market.

Both are imported into Australia exceeding the allowable personal limit and avoid customs obligations.

Footage revealed the ease of purchasing illicit tobacco and cigarettes through Adelaide stores. Pictures: supplied

Industry estimates have revealed an Adelaide store trading in illicit tobacco would sell about $17,360 worth of cigarettes or chop chop a week, making up more than $900,000 a year.

Across the 14 stores proven to be currently trading illicit cigarettes, more than $10.8m in profits is being made annually.

The investigation was undertaken by a source who has declined to be named for security reasons.

It involved multiple people making inquiries in person in Adelaide in recent months at multiple stores including delis but no official purchase of illegal substances was made.

In the 2021/2022 financial year, the Australian Border Force detected and seized more than 150,000 shipments of illicit tobacco, including 897 tonnes of loose-leaf tobacco and 1.11 billion cigarette sticks.

Commander Greg Lindsell, from the ABF Special Investigations, said cigarettes were among the most smuggled “legal” products in the world.

“Cigarette smuggling is a form of transnational organised crime, dominated by serious organised crime groups,” Mr Lindsell said.

“There is a common misperception of illicit tobacco as a victimless crime, this is simply not accurate.”

Illicit tobacco and cigarettes are widely available at many Adelaide stores. Pictures: supplied

The ABF said organised crime groups were diversifying their trade into illicit tobacco to fund their criminal activity, seeing it as a “high-reward, low-risk” commodity.

In a recently released KPMG report, Adelaide’s non-domestic-use of cigarettes, referring to the consumption of illicit products, was 8.8 per cent, just behind Sydney at 9.6 per cent.

The numbers were gathered in an empty-packets survey, which saw independent market research agency WPSM remove 800 packs of cigarettes from bins across 25 Adelaide suburbs from October to November 2021.

Of the packets collected, nearly 9 per cent were illicit.

A packet of 20 Marlborough cigarettes retail for nearly $40 in Australia, compared with just over $20 through the illicit market and are easy accessible.

Earlier this month, two Taiwanese-Australian nationals learned the risks of importing illicit tobacco to Australia after they smuggled more than a million sticks of illicit cigarettes into the country.

In the District Court of SA, Chia-Sheng Chang and Shish-Chieh Tsai were sentenced after ABF inspectors intercepted a consignment of pallets labelled “bathroom cabinets”.

They both received two-year sentences with a non-parole period of eight months.

Two people were sentenced after ABF officers intercepted a consignment of pallets labelled "bathroom cabinets" which had over a million sticks of illicit cigarettes. Picture: ABF

Two people were sentenced after ABF officers intercepted a consignment of pallets labelled "bathroom cabinets" which had over a million sticks of illicit cigarettes. Picture: ABF

A spokesman from British America Tobacco said police should be co-operating with the Commonwealth on strategies to disrupt illicit tobacco networks.

“South Australia has a head start in that police already have powers to close these stores down if they want, but they must recognise that this is about more than just cheap cigarettes, it’s organised crime operating in the community” the spokesman said,

“An illicit tobacco shop front can be turning over more than $10,000 per week in sales, the current penalties of $500 on-the-spot fines provides no deterrent value to the criminals involved and should be increased immediately.”

The spokesman said worryingly, illicit tobacco salespeople were indifferent about whom they sold to and often included people aged younger than 18.

“These operators should not be confused with the responsible retail industry selling tobacco products in full compliance with the law.”

An Australian Taxation Office spokesperson said their team was responsible for ensuring excise is paid on domestically grown or manufactured tobacco.

“Licences issued by the ATO for the cultivation or manufacture of tobacco were withdrawn in 2006,” the spokesperson said. “There have been no licences issued since this date.

“Given no licences have been issued, the ATO’s focus is targeted at the illegal cultivation of tobacco, while supporting the ABF to address illegal tobacco importation.”

Since July 2016, the ATO has undertaken 108 seizures totalling 607 tonnes of domestically cultivated illicit tobacco in Australia, with an estimated $747m excise evaded.

“There are significant penalties for those who are prosecuted for illegally growing tobacco domestically,” the spokesperson said.

“These penalties can include criminal convictions with a prison sentence of up to 10 years or a fine, or both.”