The scourge of illegal tobacco

The latest KPMG Report into illegal tobacco in Australia in 2019 is further support for the recently published ‘AACS Road to recovery’ document for our industry in a post COVID -19 era.

“Moratorium on further tobacco excise increases and greater law enforcement at ‘street level’ on sales of illicit tobacco:  we have seen the steady growth of illicit tobacco sales in our country, taking away sales from legal and responsible retailers and suppliers as well as robbing the government of excise. Certainly we see the excellent work that Border Force is doing in making seizures of large quantities of tobacco products, however products are still making it to street level and being sold at prices far cheaper than legitimate products with no taxes being paid. As the cost of legal tobacco increases consumers shifts their purchasing to these illicit products which are sold to people of all ages. Its time to recognise this real problem and to bring some reality back to the pricing of legal tobacco.”

Australia’s illicit tobacco consumption has reached an all-time high and as tobacco excise pushes the cost of cigarettes to record levels, the new report has revealed one in every five cigarettes smoked is an illegal product.

The annual KPMG in the UK Report into illicit consumption in Australia found the illicit trade now accounts for around 20.7% of total tobacco consumption, a huge increase from 14.1% last year. This is supported by the number of undeclared tobacco seizures, which rose to 286,663 in 2018/2019, an annual increase of 46%.

Tobacco accounts for 38.9% of sales and represents $3.4billion in the convenience industry. Sales only grew 0.8% in 2019 in our industry, in part affected by the increasingly high tobacco prices as a result of excise increases as well as the affects of illegal tobacco on our industry [source: AACS State of the industry report 2019].

We support calls for targeted, state-based taskforces to focus on retail enforcement in suburban areas.