Australia’s illegal cigarette trade has exploded into a full-scale criminal economy, prompting fears within the legal tobacco industry that its industry is being pushed towards extinction.
The debacle is hitting the big tobacco giants hard. So much so that a representative of Philip Morris International privately warned a Senate inquiry this week that its days were numbered in Australia.
The tobacco giant reportedly told the closed-door hearing that organised crime had become so deeply embedded in the illicit trade that executives feared for their safety, arguing their identities should remain confidential because of potential threats.
The corporation reportedly argued that legal cigarette products in Australia could effectively disappear by 2030 if current trends continue.
At the centre of the crisis is Australia’s booming underground cigarette market, now estimated to account for as much as 60 per cent of all tobacco sales nationwide.
Authorities say the scale of the problem is staggering. Nicotine is widely accepted to be one of the toughest addictions to crack, and broader cost-of-living pressures have encouraged smokers to look elsewhere as service station packs skyrocket.
The issue has merged into the disposable vape market, which has exploded in Australia over the past decade.
Under a nationwide crackdown known as Operation Printwall, the Australian Border Force has seized 998.5 tonnes of illegal tobacco products and four million vapes since December alone.
Officials say the haul was so large that the cigarettes, if laid end-to-end, would stretch almost 72,000 kilometres — enough to circle the Earth nearly twice.
More than 786 million illegal cigarettes were intercepted at the border, while another 35 million were stopped offshore before even reaching Australia.
Authorities have also released footage showing one traveller allegedly attempting to smuggle a suitcase packed with illegal cigarettes into the country, with cartons spilling across a table as border officers searched the luggage.
ABF Assistant Commissioner Tony Smith said criminal operators were being aggressively targeted through supply chain disruptions, container inspections and airport interceptions.
“Since the commencement of Printwall, the ABF’s work has stripped product from the supply chain, increased risk for criminal operators, and placed tangible pressure on the illicit trade’s economics nationwide,” he said.
But despite the massive enforcement effort, the black market continues growing.
Australia’s soaring tobacco excise — which is among the highest in the world — has pushed cigarette prices beyond $70 a pack in some cases, creating an enormous financial incentive for organised crime groups flooding the country with cheap illegal products.
In recent years, the illicit trade has become increasingly tied to gang violence, extortion rackets and a wave of tobacco shop firebombings across Melbourne and Sydney as syndicates battle for control of the market.
The Philip Morris representative argued during the Senate inquiry that lowering tobacco excise could help undercut criminal operators by making legal cigarettes more competitive again.
That sparked fierce backlash from health advocates and Labor MPs, who criticised Coalition senators for allowing the hearing to take place behind closed doors despite Australia’s obligations under the World Health Organisation tobacco control framework.
The secret hearing turned combative after Coalition senator Jonathon Duniam asked the representative what Australia could face “in this dystopian world in 2030, when all tobacco or nicotine is illegal”.
The company warned organised crime could effectively take over the country’s nicotine supply chain if current trends continued, saying the legal market was becoming “unsafe and definitely unsustainable”.
But Labor senator Dorinda Cox aggressively challenged the company over whether any of its products were ending up in the illicit market.
“Are you able to guarantee to the Australian Senate that none of your tobacco that you produce ends up in Australia’s illicit market?” she asked.
When the representative pointed to anti-diversion controls and counterfeit products, Senator Cox fired back: “How do you know that if you don’t have any production controls in place? That doesn’t make sense at all.”
Greens senator Jordon Steele-John went further still, comparing the company’s appearance before the inquiry to “inviting mosquitoes to give evidence at an inquiry related to the prevention of the spread of malaria”.
He later mocked Philip Morris’s argument that lowering tobacco excise could help weaken criminal operators.
“So, in your infinite wisdom, the best idea you can chuck at us … is lower the amount of tax that you pay,” he said.
“It’s a sophisticated submission that ends in the shocking conclusion that you should pay less tax. It’s not a serious proposal.”
Federal customs minister Julian Hill accused major tobacco companies of failing to provide transparency around their supply chains and warned Australia would not “surrender our health policy” to organised crime.
Prof Garry Jennings of the Heart Foundation likened the scene to inviting “the enemy into the war room”.
“Big tobacco will simply argue for a reduction in excise so it can sell more cigarettes legally,” he said via the publication.
“It has no interest in public health or safety, which is what this nuanced discussion is about. But disappointingly, we have no way of knowing what they discussed with the committee.”
Australian states are now diverging sharply in their response to the illicit tobacco explosion, with experts warning some jurisdictions are falling dangerously behind as organised crime embeds itself deeper into the market.
A new ranking released by the Australian Council on Smoking and Health placed Queensland and South Australia at the top of the country for cracking down on illegal cigarettes, citing aggressive enforcement, store shutdowns and strong political backing.
But New South Wales was accused of needing to “seriously lift its game”, while the ACT and Northern Territory were labelled among the country’s weakest performers.
Public health experts say the uneven response has created a fragmented national system where some states aggressively target illegal operators while others struggle with weak licensing laws, limited enforcement and inconsistent penalties.
University of Sydney public health professor Becky Freeman said the illicit trade was no longer a hidden “black market” operating in the shadows.
“It’s clearly an in-your-face market,” she said.
“It’s part of the business model now that retailers just sell untaxed illicit goods.”
