Authorities in South Australia have increased their crackdown on the illicit tobacco trade, carrying out nearly 400 raids across the state in the last ten months. This surge in activity comes as demand for cheaper, untaxed cigarettes continues to rise.
Data obtained by The Advertiser reveals that Consumer and Business Services (CBS) have conducted 394 inspections across 152 suburbs since July 2024. Targeted locations included tobacconists, gift shops, and other unlicensed retailers suspected of selling illegal cigarettes. The most concentrated raids took place in Adelaide’s CBD (30 searches), followed by Mount Barker, Mount Gambier, Salisbury East, Elizabeth, and Port Augusta.
Tobacco Tax Hikes Drive Black Market Sales
The Federal Government has steadily raised tobacco taxes in an effort to reduce smoking rates. In 2010, a 25% tax increase on tobacco products was implemented, followed by annual hikes of 12.5% from 2013 to 2020. Recently, taxes on tobacco have been further raised twice yearly, in March and September. As of March 2025, each cigarette carries a $1.40 tax, bringing the cost of a 20-pack of cigarettes to around $50, including $28 in tax.
However, these tax hikes have also fuelled the rise of the illegal tobacco market. Criminal syndicates are undercutting legal retailers by selling black-market cigarettes for as little as $15 per 20-pack.
Smokers Turn to Cheaper Black Market Cigarettes
For many smokers, the financial strain of rising living costs has pushed them toward the illegal market. Long-time smoker Sharon van Homelen shared how switching to cheaper packs has saved her hundreds of dollars each month. “Since I switched to black market cigarettes, I save around $400 every fortnight,” she said, explaining that the savings help with everyday expenses like rent and groceries.
Despite efforts to quit, van Homelen, who has smoked since she was 17, found it difficult to break the habit. She also noted that many illicit tobacco shops continue to reopen after being raided or fined, showing the enduring profitability of the trade.
Violence Escalates Among Gangs Competing for Tobacco Profits
The illegal tobacco trade has sparked violent competition between criminal gangs vying for control over distribution. Since July, there have been 18 suspected arson attacks on tobacco shops across South Australia, with rival gangs using firebombings to intimidate shop owners into paying protection money or eliminating competitors.
One significant incident in Cowandilla saw an illicit shop targeted by arsonists, with flames threatening residents above the store. Emergency responders evacuated a family living upstairs, including a young child, as part of the intense damage caused.
Operation Eclipse Takes Action
In response to the violence and growing concerns, South Australia Police launched Operation Eclipse in September 2024, following a surge in arson attacks linked to the illegal tobacco trade. Led by Detective Chief Inspector Brett Featherby, the taskforce has worked with Victoria Police, Australian Border Force, and CBS investigators to target criminal networks involved in smuggling and distributing illicit tobacco.
The operation has led to 33 arrests and the search of 47 residential properties, 122 businesses, and 14 storage facilities. Authorities have seized more than $16.2 million worth of illicit tobacco and $2.1 million in cash.
Despite these efforts, the financial rewards of the illegal tobacco trade remain high, with organised crime syndicates continuing to operate across the state. The Australian Criminal Intelligence Commission has highlighted how these criminal groups only need one in every 30 shipping containers to slip through border controls to still turn a profit. This enables them to continue funding other illicit activities.
Recent investigations have revealed that illicit tobacco suppliers are pocketing millions of dollars each month, while individual illegal shops can make between $900,000 and $1.3 million monthly.
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