The Crime Wave Slamming Australia’s Supermarkets Revealed

Australia’s major supermarkets are losing hundreds of millions — but not from shoplifters. A booming black market for tobacco is fuelling a nationwide crime wave that’s now hitting corporate profits, taxpayers, and public health.

Supermarkets vs. the Illicit Tobacco Trade

Coles recently revealed that organised crime has become a financial threat — and not in the way most expect.

“Strong growth in sales has been partially offset by a further decline in tobacco as a result of the impact of new tobacco legislation and growth in the illicit market,” Coles said in its annual report.

That’s right — the culprit isn’t theft, but illegal tobacco sales. Analysts estimate Coles lost nearly $600 million in tobacco revenue in the last year alone as criminal syndicates flood the market with untaxed, unregulated cigarettes.

This black market has grown so large it’s now considered a $40 billion industry, forcing companies like Coles to disclose losses to shareholders.

Violence and Arson as Crime Syndicates Expand

Australia’s Health Minister confirmed that “violence and arson” are escalating as gangs fight for control over this lucrative market.
In response, the government created the Illicit Tobacco and E-Cigarette (ITEC) Commissioner, but critics say enforcement remains weak and fragmented.

The problem lies in jurisdiction — while federal authorities lose tax revenue, much of the enforcement burden falls on state police, creating gaps criminals exploit.

The True Cost — and It’s Not Just to Retailers

Illegal tobacco isn’t just hurting supermarkets — it’s robbing taxpayers too. The government’s tobacco tax revenue, once expected to be strong through 2025, has dropped dramatically.

That shortfall will likely be covered through higher income taxes, meaning ordinary Australians are footing the bill.

Even more concerning, the cheap smokes flooding the market — sometimes just $15 per pack versus $35–$60 in stores — are untaxed, unregulated, and often sold online.

A Black Market Hiding in Plain Sight

Illicit cigarettes are now being openly sold through mainstream payment and delivery systems, with minimal law enforcement interference. This growing underground economy risks creating powerful crime syndicates reminiscent of America’s Prohibition era — an issue that could haunt Australia for decades.

Experts say this crisis was years in the making. Sky-high tobacco taxes once helped reduce smoking rates but eventually reached a breaking point, driving consumers toward the black market.

According to Roy Morgan, illicit tobacco use among Australians aged 18–24 has jumped from 1.5% to 9.1%, reversing years of public health progress.

The Call for Action

Analysts warn that if the government fails to act decisively, the illicit tobacco market will continue to erode legitimate businesses, empower criminal groups, and undercut health reforms.

“The government needs to declare an emergency and stop the illegal cigarette trade — now,” concludes industry observers.