Case Explained: Australian crime syndicates using fake tobacco packaging to flood legal market – Legal Perspective

Australian crime syndicates are using fake plain packaging — mass produced out of Chinese factories — to legitimise illicit tobacco and flood the legal market.

The ABC has uncovered evidence of Chinese manufacturers spruiking the bogus packaging on mega online marketplaces like Alibaba, where it is sold for as little as $0.05 and can be fully customised to mimic legitimate products.

The knock-off Australian packets, for both tailor-made cigarettes and roll-your-own tobacco, bear a striking resemblance to the real thing, carrying stringent warning labels, pictures of smoking-related harms and the distinctive drab-brown colour chosen by authorities.

Industry sources said the fake packs and pouches were being used for illicit tobacco, either illegally grown or secretly smuggled into the country from overseas. 

Legal tobacco is imported into Australia after being pre-packaged overseas.

The ABC has obtained an email from one Chinese factory in Shenzhen boasting about its Australian customer base for the bogus packaging.

“We have built a strong client base of more than 50 customers across Australia, supplying them with high-quality tobacco pouches and cigarette packs,” the manufacturer claimed.

Large-scale counterfeit packaging production raises criminal concerns

The mass production of counterfeit plain packaging raises serious concerns that criminal syndicates are trying to squeeze what is left of the nation’s legal tobacco market by selling a cheaper and authentic-looking product.

Becky Freeman, a public health expert from the University of Sydney, said the bogus packaging represented another way criminal syndicates were trying to get around the law.

“So trying to make their products look like legal products in the hopes that they will dodge either enforcement at the border … or dodge enforcement at point of sale by saying, ‘Oh look, I’m only selling legal products here, they look exactly like they’re supposed to look,'” Professor Freeman said.

The revelation comes after an illegal cigarette machine — capable of producing up to 3.6 million cigarettes a day — and eight large boxes of counterfeit plain packaging were seized by the Australian Border Force (ABF) in north-western Sydney last month, along with more than 7.5 kilograms of chop-chop. 

An ABF spokeswoman said the agency was aware of organised crime groups importing counterfeit packaging likely for illegal tobacco.

“Counterfeit plain packaging is not a new challenge for the Australian Border Force,” the spokeswoman said.

“We suspect the criminal syndicates believe that by not having the actual tobacco products in the packets, the ABF will not be able to seize the goods, but this is not the case,” she said.

“There are significant checks and balances in place that enforcement officers can use to check the legitimacy of these imports.”

Illegal tobacco ‘hiding in plain sight’

Theo Foukkare from the Australian Association of Convenience Stores, which represents retailers, said illegal tobacco was now “hiding in plain sight”.

“It just underpins how big a problem we do have,” he said.

Mr Foukkare said crime syndicates were using the counterfeit plain packaging to legitimise illicit tobacco.

“In North Queensland … we are seeing Australian brands now coming in from overseas that are packaged and appear to be a legal product, but they’re being sold into both the legal and illegal markets at a retail price of around $25,” he said.

Federal taxes designed to curb smoking rates have made Australian tobacco among the most expensive in the world — the cheapest cigarettes cost about $36, compared to an illegal packet at about $12. 

The products have been so popular with customers that billions have been diverted from the federal government coffers in lost tax. 

“To be frank, retailers don’t care what the price is,” Mr Foukkare said.

“The price will be the price. What we care about is illegal operators going unchecked.”

Criminal syndicates estimated to control up to 60 per cent of market

The black market has surged in Australia, with recent figures from Australia’s new Illicit tobacco and e-cigarette commissioner revealing that in 2024-25, an estimated 509 tonnes of loose-leaf tobacco and 2.66 billion cigarettes were seized by authorities, with a street value of $3 billion.

The commissioner estimates criminal syndicates control between 50 to 60 per cent of the market, valued between $4 billion and $6 billion.

Based on current trends, research from Oxford Economics — commissioned by Ritchies IGA, one of the biggest independent legal retailers in the nation — has predicted organised crime will ultimately control close to 90 per cent of the market and that the legal tobacco industry in Australia faces collapse within just three years.

The struggle for control of the lucrative profits has sparked a crisis, particularly in Victoria, where Melbourne’s tobacco wars have led to several deaths and more than 120 firebombings.

It prompted the Victorian government to set up Tobacco Licensing Victoria, which has so far issued more than 2,300 licenses, mostly to retailers.

A justice department spokesman said the licensing body — which has 14 inspectors covering the whole state — had seized illicit tobacco and penalised illegal operators since it started enforcing the news laws last month.

In contrast, New South Wales has about 60 inspectors, with more to be recruited, while Queensland will ultimately have 43 enforcement officers and Western Australia will have about 40.

Number of enforcement officers in Victoria ‘completely inadequate’

Professor Freeman said the states and territories had been “quite slow” to act despite decades of sustained campaigning from anti-smoking groups.

“The states are finally catching up with Victoria being the last one to implement a licensing system,” she said.

“If you pay for a license you can have one, and again this has not addressed the oversupply of tobacco retailers that we have. 

“Frankly 14 enforcement officers for the entire state of Victoria, to me, seems like a completely inadequate number.”

Professor Freeman instead urged Victoria to follow South Australia’s lead and give authorities the power to instantly shut down shops selling illicit tobacco without going to court.

She said state and territory governments should also consider dramatically slashing the number of tobacco licenses.

“There are more places selling tobacco products than fresh fruit and vegetables in most neighbourhoods,” Professor Freeman said.

“For a product that’s so highly taxed and is so dangerous and incredibly addictive, we’re just allowing it to be sold absolutely everywhere and it’s making enforcement a nightmare.”

A spokesman for the Victorian government would not say whether it was recruiting more tobacco inspectors but left the door open to giving them extra powers.

“As enforcement ramps up, we’re developing further options to strengthen our response including measures used in other states to put even more pressure on illicit tobacco,” he said.

Loading