Organised crime gangs smoke out legal players Philip Morris, British American Tobacco to dominate tobacco wars

Organised crime gangs have smoked out legal players Philip Morris and British American Tobacco to rule Australia’s tobacco trade.

Organised crime has hijacked Australia’s $15.5 billion tobacco market to the point where it is now the dominant retail player.

Gangs run by the likes of exiled crime kingpin Kazem Hamad have surged past legal giants like British American Tobacco and Philip Morris to rule the sector.

The Herald Sun has been told the illicit operators now have a 36 per cent share of the smoke sector.

In Victoria – where the gangs have for two years been fighting a fiery war for control of the lucrative black market – the figure is believed to be even higher.

It is the only state without a licensing regime, which industry figures say has been a major factor in criminal groups viewing it as attractive.

The scourge is now spreading interstate.

Organised crime gangs have hijacked Australia’s $15.5b illicit tobacco trade

New South Wales had three tobacco shop arsons last month, two on the Central Coast and one at Ballina in the far north.

South Australian authorities have been forced to move fast after a wave of firebombings linked to brawling gangs in recent months.

While hundreds of thousands of smokers battling a cost of living squeeze don’t care about the hit to big tobacco and the taxman, their spending is funnelling billions of dollars towards organised crime.

Sources say the 36 per cent share snatched by the outlaw operators had been accumulated at a rapid pace.

Last year, a survey of suppliers put it at 28 per cent, which was up five per cent on the previous 12-month period.

Fred Harrison, the chief executive of the Ritchies-IGA supermarket chain, said his business had dropped $150 million in sales in the past three years because consumers were flocking to the outlaw operators.

Mr Harrison said this was solely due to the surge in consumption of cut-price products sold by the vast network of illegal operators.

“It is now the number one supplier,” he said.

As its hand in the market has strengthened dramatically, the illegal syndicates have been warring for the huge profits at stake.

That has resulted in more than 115 arsons and widespread standover activity which has forced Victoria Police to set up a taskforce named Lunar specifically to combat criminal activity linked to the trade.

The huge profit margins and low penalties have made illicit tobacco a honey pot for big criminal players.

Gangs have been raging in Victoria’s tobacco wars for two years — and show no sign of slowing down. Picture: Andrew Henshaw

A deck of 20 smokes can be bought for as little as $15. Picture: SAPOL

It is estimated they need only to get one in three containers of product through the docks to come out ahead.

Meanwhile, the illicit operators are understood to have gained almost complete market domination of nicotine vape products across Victoria.

While the only legal place to purchase a vape is from a chemist, dodgy tobacconists will continue stocking and selling the products because of the lack of enforcement.

There is also a suggestion among industry figures that those who vape may return to smoking cigarettes in the near future.

A $60 price tag is attached to some vapes sold at illicit retailers while a deck of 20 smokes can be bought for as little as $15.

The Herald Sun understands a handful of legal retailers have also begun stocking illicit smoke lines.

Any move from those chains to sell the black market product would likely be an attempt to regain market share lost in the past two years.