Multimillion-dollar profits driving Melbourne’s fiery tobacco wars

Victoria’s fiery tobacco warfare is being fuelled by prices of up to $13m for a shipping container of illicit smokes, industry and underworld sources have revealed.

Organised crime’s tobacco bonanza is being fuelled by prices of up to $13m for a shipping container of illicit smokes.

Industry and underworld sources have told the Herald Sun the profit for the gangland bosses behind each consignment can run as high as $5m.

The huge sums are behind the fiery conflict which has gripped Melbourne’s underworld in the past 12 months.

About 50 tobacco shops and other businesses have been torched since exiled crime figure Kazem Hamad started an aggressive push for control of the illicit and largely unregulated sector.

Kazem Hamad at the footy with Toby Mitchell and senior Mongol bikie Tyrone Bell. Picture: Instagram

Tobacco industry analysis puts the ultimate retail value of a 40-foot container of smoke products at between $7m and $13m, more than double the worth of eight years ago.

The same load of contraband can be bought overseas for about $250,000, meaning there is potential for a 50-fold return on investment.

This has generated fierce competition for a lucrative market which carries other advantages for the tobacco racketeers.

Disposal of the product is far easier than for big shipments of narcotics like cocaine and methylamphetamine where buyers are at risk of long prison terms.

“It’s always easier to get people to buy tobacco,” the source said.

No licensing system is at this point in place for selling tobacco, meaning vast amounts are sold out of legally operating shopfronts.

The huge gap between the cost of illicit product sold in those shops and the tax-bloated prices of legal smokes means there is always a willing market of smokers who are already dealing with a cost-of-living crisis.

A tobacco store in Morwell was one of the latest smoke shops to be firebombed. Picture: Facebook

A tobacco shop in South Yarra was also torched in February this year. Picture: David Crosling

The number of illicit tobacco outlets has grown from 50 to about 1000 in the past five years.

Underworld sources say Hamad’s short-term strategy is to destroy the existing major illicit tobacco players

They say he does not care if that means a loss because he will make the money back many times over if he takes complete control of the market.

“Even if it cost him a million to get rid of the opposition, it’s cost him a quarter of a container (in profit) and he’s got 100 per cent of the market,” an underworld source said.

“All the opposition’s gone. Kaz isn’t worried about making money now.”

The Iraqi-born Hamad is believed to be living in the Middle-East where he remotely manages the Melbourne arm of his crime empire.

There have been numerous allegations his minions have visited tobacco shops demanding extortion payments.

Those visitors have, in some cases, handed a phone to business operators so Hamad can intimidate them first-hand.