He is just one small drop in the bucket when it comes to New Zealand\u2019s illicit tobacco industry. A new study claims more than a quarter of all tobacco consumed last year was illicit, cheating the Government out of $600 million in tax revenue.<\/p>\n
The annual study, commissioned by Imperial Tobacco New Zealand and British American Tobacco New Zealand, found that 27.2% of all tobacco consumed in 2024 was from illicit products, including smuggled contraband.<\/p>\n
The study also showed a sharp rise in the consumption of contraband tobacco compared with last year, climbing nearly 42%, from 205.4 tonnes to 291.5.<\/p>\n
Most of the illicit tobacco in the market is smuggled in as cigarettes, while smaller percentages are loose-leafed, illegally homegrown or are counterfeits designed to look like legitimate brands.<\/p>\n
Smuggled cigarettes are a large portion of the illicit tobacco market. Photo \/ New Zealand Customs Service<\/p>\n
An Imperial Brands spokesman said the report highlighted how the illicit tobacco trade was \u201cincreasingly sophisticated\u201d and risked becoming \u201cdeeply entrenched across the country\u201d.<\/p>\n
The New Zealand Customs Service said the figure in the report seemed \u201ctoo high\u201d, but did not have a \u201crobust estimate\u201d for how big the market truly was.<\/p>\n
The Canterbury illicit tobacco seller who spoke to the Herald said he smokes about a pack a day himself and that buying contraband cigarettes was \u201ca lot cheaper\u201d and easier.<\/p>\n
\u201cI know quite a few people that are in the same boat. People aren\u2019t wanting to pay nearly $40 a pack,\u201d he said.<\/p>\n
\u201cI can\u2019t imagine the person I\u2019m getting them off is getting them much cheaper than he\u2019s giving them to me.\u201d<\/p>\n
He said the cigarettes could be found at \u201cmost little dodgy dairies\u201d where he lived, but that he had also found them in Auckland and Wellington.<\/p>\n
\u201cThey\u2019re flooding the market because they are so much more affordable. They\u2019re also easy to access. Now, just everyone seems to be smoking them,\u201d he said.<\/p>\n
\u201cWe\u2019re in a cost-of-living crisis, everyone\u2019s broke, they\u2019re always going to be more keen to get it for a cheaper price.\u201d<\/p>\n
The man didn\u2019t feel there was much that could be done to stem the flow of contraband into the country.<\/p>\n
\u201cIf they want the illegal cigarettes to slow down, they need to bring the tax down, but that\u2019s not viable, that won\u2019t happen.\u201d<\/p>\n
There would be plenty of people like him who found someone to buy them off, he said.<\/p>\n
\u201cI don\u2019t think it\u2019s worth police resources to crack down on it that much. I think cigarettes are a pretty small fish to fry.\u201d<\/p>\n
Excise tax on tobacco has increased to $1812.61 per kilo compared with $393.03 in 2009. Depending on the brand, the tax makes up around 80% of the cost of a pack of smokes.<\/p>\n
Examples of foreign cigarette packets found in New Zealand and homegrown tobacco. Photo \/ Imperial Brands Australasia<\/p>\n
Imperial Brands head of corporate and legal affairs for Australasia, James Bigwood, said the recent report \u201chighlights a clear and concerning trend\u201d.<\/p>\n
The local illicit tobacco market was growing rapidly and becoming increasingly sophisticated, Bigwood said.<\/p>\n
\u201cWithout decisive action now, the trade in illicit tobacco risks becoming deeply entrenched across the country.\u201d<\/p>\n
International experience showed that a multi-agency approach worked best, Bigwood said.<\/p>\n
\u201cAustralia, for example, recently announced a National Disruption Group and have appointed an Illicit Tobacco and E-Cigarette Commissioner to co-ordinate a whole-of-Government response. State governments have introduced tougher penalties and implemented dedicated enforcement frameworks. Acting early will help prevent the problem from escalating further.\u201d<\/p>\n
Bigwood said the trend that illicit tobacco consumption was rising each year was \u201cundeniable\u201d.<\/p>\n
While commissioned by tobacco companies, the research was carried out by an independent consultancy using established methods and used \u201crobust methodologies\u201d, he said.<\/p>\n
It was \u201cone of the few studies that captures all four categories of illicit tobacco\u2014counterfeit, contraband, homegrown and unbranded products”.<\/p>\n
The study uses data from a biannual Kantar survey of smokers over 18 and an empty pack survey carried out twice a year in the country\u2019s six largest cities. The figures gathered from these surveys are cross-referenced with other data sources, including legal domestic tobacco sales, international traveller volumes and Customs interceptions.<\/p>\n
Customs officers at Wellington International Airport intercepted a 35-year-old Indonesian traveller in 2025 who body-packed five cartons of cigarettes in an attempt to defraud Customs revenue. Photo \/ Customs<\/p>\n
Latest estimates indicate illicit tobacco makes up nearly 40% of Australia\u2019s market and New Zealand tends to follow Australia\u2019s trends with a one-year lag, the report said, warning his country risked seeing similar numbers.<\/p>\n
\u201cAustralia\u2019s experience is a warning. Despite ongoing efforts to address the problem, the illicit tobacco market remains deeply entrenched and linked to organised crime,\u201d Bigwood said.<\/p>\n
\u201cNew Zealand still has an opportunity to act decisively and prevent the same outcome.\u201d<\/p>\n
A Customs spokeswoman said estimating the size of the illicit tobacco market was \u201cinherently challenging\u201d due to the covert nature of the activity and the limitations of available data.<\/p>\n
\u201cBy their nature, illegal markets are deliberately organised to be hidden,\u201d said Debbie Kay.<\/p>\n
\u201cWhile Customs do not have a robust estimate of the size of the illicit market, 27.2% feels too high to us,\u201d Kay said, noting in 2022, Customs\u2019 working estimate was that illicit tobacco had a market share of 6-7%, equating to about $175m in taxes not being paid to the Crown.<\/p>\n
\u201cGiven the trend of increasing seizures, it appears likely that the illicit market will have grown materially since then.\u201d<\/p>\n
A variety of studies come up with a wide range of estimates and many methodologies could have large margins of error. Customs also noted that there were illicit tobacco markets in every country, including ones with low excise rates.<\/p>\n
The illicit market was a \u201cpersistent and evolving threat\u201d and continued investment in border enforcement, intelligence-gathering and inter-agency collaboration was essential to combat the risks posed by the trade, Kay said.<\/p>\n
Nigel Barnes from the New Zealand Customs Service with some confiscated tobacco products discovered in raids on illicit operations. Photo \/ Customs<\/p>\n
Evading taxes on tobacco was cheating the Government out of money that could fund health, education and infrastructure, and was also generating \u201csignificant profit\u201d for organised criminal groups.<\/p>\n
In the 2022 Budget, Customs was allocated an additional $10.4m in funding over four years to help tackle tobacco smugglers.<\/p>\n
\u201cThis is resulting in seizures and prosecutions,\u201d Kay said.<\/p>\n
In August, a man was arrested for allegedly importing nearly one million uncustomed cigarettes into New Zealand and avoiding a tax bill of $1.4m.<\/p>\n
Customs officers intercepted two shipments from China at NZ Post\u2019s Auckland Processing Centre. They discovered the consignments, which were declared as clothes, had instead been filled with packets of the Chinese cigarette brand Double Happiness.<\/p>\n
The first shipment contained 340,000 cigarettes, while the second had 587,000, bringing the number of cigarettes seized to 927,000.<\/p>\n
Melissa Nightingale is a Wellington-based reporter who covers crime, justice and news in the capital. She joined the Herald in 2016 and has worked as a journalist for 10 years.<\/p>\n","protected":false},"excerpt":{"rendered":"He is just one small drop in the bucket when it comes to New Zealand\u2019s illicit tobacco industry.…\n","protected":false},"author":2,"featured_media":224011,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[836,2562,30689,134125,185,225,130,117,111,43,139,425,69,1118,13420,6182,383,131,223,1961,30913,80],"class_list":{"0":"post-224010","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-zealand","8":"tag-836","9":"tag-claims","10":"tag-heralds","11":"tag-illicit","12":"tag-is","13":"tag-market","14":"tag-more","15":"tag-new","16":"tag-new-zealand","17":"tag-news","18":"tag-newzealand","19":"tag-now","20":"tag-nz","21":"tag-of","22":"tag-quarter","23":"tag-stories","24":"tag-study","25":"tag-than","26":"tag-the","27":"tag-this","28":"tag-tobacco","29":"tag-zealand"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/224010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=224010"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/224010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/224011"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=224010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=224010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=224010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}