The eye-watering economics of illict cigarettes
Gangsters are flooding Australia with black-market tobacco that’s driving record seizures and bloody turf wars, as smugglers turn tobacco into the underworld’s most lucrative commodity | WATCH
Tobacco smugglers have been stripped of more than 2.5 billion cigarettes and thousands of tonnes of tobacco at the nation’s borders, which would have equated to a loss for the federal government of more than $4bn.
The volume of tobacco intercepted between July 2024 and June 2025 represents $4.36bn in lost duty, marking the largest annual bust on record and a turning point to the scale of tobacco smuggling in Australia.
While the number of interceptions dropped, the quantity of tobacco seized surged to its highest level, a shift that’s attributed to better targeting of high-volume sea cargo shipments linked to transnational organised crime.
The latest Australian Border Force data obtained by The Australian reveals a more than fourfold increase of seizures in half a decade – from 598 million sticks in 2020-21 to a record 2.5 billion in 2024-25.
The promise of massive profits has driven the rise of corner stores selling illicit tobacco and nicotine products, fuelling a wave of firebombings and violent turf wars as gangs and Middle Eastern crime syndicates battle for control of the booming black market.
Most of the intercepted product was shipped through ports in Victoria and NSW and originated from China, Hong Kong, Singapore and the United Arab Emirates. A single container of illicit cigarettes can cost $400,000 to ship from overseas and return profits of up to $10m.
The figures eclipse last year’s record haul of 1.86 billion cigarettes and reflect a consistent upward trend, including 898 million seized in 2021-22 and 867 million in 2022-23.
The federal government collected just $9.7bn in tobacco excise last financial year – a 40 per cent drop from the 2019–20 peak of $16.3bn, and the lowest return since 2014–15, according to federal Treasury data.
Authorities believe many of the syndicates behind the shipments are also involved in drug trafficking and money laundering, using tobacco as a low-risk, high-reward source of revenue.
The ABF says the rise in seizures is the result of intensified operations across international supply chains, with Australian officers embedded overseas now stopping tobacco shipments long before they reach Australian shores.
“We’re seizing millions of illicit cigarettes and hundreds of kilos of illicit tobacco at the border every single week,” said Commander Ken McKern, who leads the ABF’s Illicit Tobacco and Vape Enforcement unit.
“These detections aren’t based on luck or random finds, they’re the result of precise, intelligence-led targeting and close collaboration with offshore partner agencies.”
Commander McKern said the 2.5 billion cigarettes seized at the border represented a more than 320 per cent increase on the volume intercepted four years ago.
“These significant volumes aren’t just numbers – they represent millions in lost profit for criminal syndicates and demonstrate ABF’s important role in protecting Australia’s border integrity,” he said.
“Stopping illicit tobacco isn’t just a domestic issue. Our officers deployed overseas are on the front line of this fight, using intelligence and international partnerships to stop illicit shipments long before they reach Australian shores.
“Our international footprint gives us a strategic advantage – we’re not waiting for the problem to arrive on our doorstep, we’re inside the supply chain, sharing intelligence, and actively preventing illicit tobacco from reaching our borders.”
The ABF recorded 23,097 tobacco detections across the 2024–25 financial year – less than half the number from the previous year – but the volume of tobacco seized was significantly higher.
In total, officers seized 2.533 billion cigarette sticks and 435.46 tonnes of loose-leaf tobacco, compared to 1.86 billion sticks and 436.57 tonnes the year before.
The combined weight of this year’s haul was 2091 tonnes, compared to 1700.5 tonnes in 2023-24.
Several of the largest seizures occurred in July. On July 4, officers intercepted 14.04 million cigarettes shipped in sea cargo from Asia. On July 13, a man travelling from the United Arab Emirates with a woman and two minors was stopped with 166,200 cigarettes and six kilograms of chewing tobacco hidden in 11 suitcases. That same day, a separate passenger from the UAE was caught carrying 71,200 cigarettes. A week later, 10.18 million cigarettes were seized from another sea cargo consignment.
In one of the biggest operations of the year, a container carrying 15.5 million cigarettes was intercepted in mid-July after arriving in NSW from the UAE.
The ABF says criminal networks continue to change their shipping routes and concealment methods in response to enforcement activity. Most of the illicit product now enters through sea freight, often packed in containers disguised as commercial goods.
A single shipping container can hold tens of millions of cigarette sticks, making large-scale interceptions far more significant than dozens of smaller seizures through mail or at airports.
Authorities are now focusing heavily on upstream disruption, targeting shipments before they leave foreign ports and working closely with international customs agencies to share intelligence and dismantle supply chains.
The ABF’s overseas network was established to identify high-risk consignments earlier and intercept larger volumes of product before they reach Australia.
Domestically, the ABF leads the Illicit Tobacco Taskforce, a joint agency initiative that includes the Australian Criminal Intelligence Commission, the ATO, AUSTRAC and the Commonwealth Director of Public Prosecutions. It works alongside state and territory police forces to pursue criminal prosecutions, disrupt local distribution networks and recover proceeds of crime.
While enforcement at the border remains the ABF’s primary focus, the agency says its efforts complement broader health and compliance strategies aimed at reducing demand for illegal tobacco and educating consumers about the risks associated with black-market products.
The ABF expects illicit tobacco shipments to keep evolving as enforcement pressure increases, but says it is investing in more sophisticated targeting tools, expanding its global reach and building stronger relationships with international partners to stay ahead of the trade.
Recent research conducted by three of Australia’s largest tobacco wholesalers shows illicit products could account for nearly half of all consumption this year.
The data, compiled by Philip Morris, British American Tobacco and Imperial Brands, estimates 39.4 per cent of all tobacco consumed in 2024 was illicit, with market forecasts predicting that number could rise to nearly 50 per cent in 2025.
The report found that “chop-chop” loose leaf tobacco – either grown illegally in Australia or imported without branding – accounts for up to 70 per cent of the illicit market. The ATO estimates about 20 per cent of this is cultivated in clandestine farms along the NSW–Victoria and NSW–Queensland borders.
South Australia is currently the only state jurisdiction that has a dedicated tobacco enforcement body, while other states rely on under-resourced compliance officers or police assistance to stamp out tobacconist stores that are selling illicit products.
Tobacco companies predict the illicit market will continue to grow, which undermines public health goals and guts small business revenues while emboldening criminal networks.
A spokesperson for Imperial Brands, the nation's third-largest tobacco wholesaler, said while the scale of the ABF’s latest seizures was encouraging, “clear and decisive” action was needed at the state and federal level.
“Whilst it is encouraging that the ABF data shows an increase in seizures, a record amount of unregulated illicit tobacco continues to enter the country,” the spokesperson said.
“Recent research shows that in 2024 nearly 40 per cent of tobacco products were illegal, up from 28 per cent in 2023. Clear and decisive action is needed … to address significant enforcement gaps, as well as address the underlying drivers that have caused this illegal market to flourish.”
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