Australia's world-highest cigarette prices fuel a booming black market and violence
In Australia, where a legal cigarette pack costs around 55 dollars, steep tobacco taxes have driven rapid growth of an illegal cigarette market tied to organized crime and violence. Similar trends are emerging in Europe and the Baltics.
In Australia's legal market, an average pack of cigarettes costs around 55 Australian dollars — nearly 40 US dollars — while the same pack can be found on the black market for as little as 10 dollars. According to The New York Times, this massive price gap means buyers no longer need secret contacts to get contraband cigarettes; they are sold openly in both small and large stores. Much of the illegal supply arrives from China and the Middle East, where tobacco is far cheaper.
Violence over market share
Surging demand has made illegal tobacco trading extremely profitable for criminal groups, and the fight over the business in Melbourne has become known as the "tobacco wars." Police have recorded at least 100 arson attacks and more than 250 assault cases linked to disputes over territory. In January 2025, a 27-year-old woman died in an arson attack on a home, apparently targeted by mistake amid the illegal tobacco conflict. Legal shopkeepers have also been drawn into the violence, pressured to sell contraband cigarettes or hand their stores over to criminal control, with threats of arson against those who refuse.
No change in tax policy
Over the past decade, Australia raised tobacco taxes eight times in an effort to curb smoking. While the government has acknowledged an "illegal tobacco crisis," it has not reversed its high-tax approach, instead pouring more resources into border control and law enforcement.
Similar trends in Europe and the Baltics
According to auditing firm KPMG, the EU consumed 41.8 billion illegal cigarettes in 2025 — 10.3% of total consumption — costing national budgets roughly 16.7 billion euros in lost tax revenue. The largest illegal market shares were found in France (41.4%), Belgium (nearly 25%) and the Netherlands (over 22%). A growing share of the illegal market now comes from counterfeit cigarettes manufactured within the EU itself. In Estonia, the volume of seized contraband cigarettes rose from 4.35 million in 2022 to more than 37 million in the first eight months of 2026, with most of the product entering the country from Latvia.
