Rogue operators peddle half-price illegal cigarettes in Sydney suburbs

A Daily Telegraph investigation has uncovered hundreds of operators selling half-price illegal cigarettes in Sydney, with authorities unable to stop the flourishing black market.

Desperate demand for half-price illegal cigarettes has sparked an explosion of suburban rogue traders peddling contraband which legitimate operators say can bring in more profits than heroin.

An investigation by The Daily Telegraph can reveal around 200 illicit operators are selling branded Esse and Marlboro cigarettes for $19 to $28 a packet, instead of ­between $40.50 and $50 for legal packs.

Unpaid duties and taxes in 2020 cost Australia $2.9 billion in excise revenue, acc­ording to latest figures from auditor KPMG, while the country’s newsagents’ association says illegal cigarettes can be more profitable for criminals than selling heroin.

Excise revenue goes towards funding hospitals, roads, schools and public services.

Rogue traders operating in Marrickville, Kings Cross, Newtown, Burwood and Wareemba secretly stuff cartons and packets of illicit cigarettes into black plastic bags under the counter.

Customers at a Dulwich Hill tobacconist.

International manufacturers British American Tobacco say demand for illicit smokes has grown 25 per cent in the past two years, and estimates at least 200 outlets are peddling them in grocery stores, tobacconists and pop-ups across Sydney, even from front windows of a home in Marrickville Rd.

When The Telegraph visited Tobacconist House on Darlinghurst Rd in Potts Point, a shopkeeper ferreted a packet of 20 Esse menthol cigarettes made in Korea from a drawer at the bottom of a sunglasses rack and charged $28.

This haul of illegally imported Esse cigarettes and a single Marlboro cigarette were purchased by a journalist from Potts Point and Dulwich Hill.

“Yes we have more, we have loads,” the store worker said, adding: “We also have Marlboro ice, take this one (cigarette stick) to try.”

At Dulwich Hill Tobacconist at 513 Marrickville Road, a suspicious seller looks the customer up and down before selling a 10-pack carton of Esses for $200 – or $190 in cash. Previous customers boast they have bought cartons as cheap as $165.

Pulling out a packet of red Marlboros from under the counter that he says are ­imported from Switzerland, he offers a carton for $190 in cash, or a packet for $19.

A house in Marrickville Rd where illicit cigarettes were sold.

At an average $20 for a pack they can buy in Southeast Asia for around $5, demand is high, with the store seeing a constant turnover of customers, the risks of selling are low and rewards lucrative.  Rogue operators face up to 10 years in prison for selling more than 500kg of tobacco but most receive a maximum of three years.

Police raids are limited and council health inspectors ­infrequently patrol illicit ­cigarette sellers.

“The margin on illegal cigarettes is so big, and the risks involved so low, that selling branded cigarettes is more profitable than selling heroin,” Ben Kearney, CEO of the Australian Lottery and Newsagents Association, said.

“Demand is getting higher because sellers are getting away with it, and the more they sell and the more profit they make, the more stores are popping up.

“They’re selling them now in gift stores, spice stores, corner shops, tobacconists and grocery stores and demand is only growing.”

An annual report by the Australian Criminal Intelligence Agency last year stated crime syndicates can afford to lose 29 of 30 cigarette containers to law enforcement and yet still make a profit.

KPMG estimates one in six cigarettes smoked in Australia in 2020 was illicit and 19.8 per cent of all tobacco sold in Australia is illegal.

Tobacconist House in Potts Point sells illegally imported Esse cigarettes.

Australian Border Force police seized 1000 tonnes of illicit tobacco entering Australia in the 12 months to February this year, compared to 787 tonnes the previous year.

As much as $1 billion worth of illicit tobacco ent­ered by sea cargo in the year to February 2022, compared to $686m the year ­before.

Organised crime syndicates posted $379 million worth of illicit tobacco into the country in the same period, compared to $352 million the year previously.

Australian Border Force Commander Trade and Travel East Sue Drennan said ­illicit tobacco was not a “victimless crime” and every day at Australia’s international ports, ABF officers were stopping large quantities of illicit tobacco concealed in salts, herbs, biscuits, beauty products, toys and furniture.

“People who engage in the illicit tobacco trade — whether it is growing, importing, supplying or buying black market tobacco — put money in the hands of serious and org­anised criminal groups,” she said.