Illicit cigarettes surge in Australia, EU, slashing revenue

Illicit tobacco now dominates markets in Australia and parts of Europe, with new data revealing a dramatic shift away from legal products and severe financial impacts on government revenues. In Australia, an estimated 80 percent of cigarettes smoked in 2025 were illicit, according to a first-of-its-kind report from the Australian Bureau of Statistics. Concurrently, a separate study for the European Union indicates illicit cigarette consumption there has risen to levels not seen in over a decade.

The Australian data, derived from experimental wastewater testing, shows nicotine consumption grew by 40 percent between 2017 and 2025, even as household spending on tobacco fell to 2016 levels. Officials said this indicates a widespread move toward cheaper black-market sources. The price of legal cigarettes has nearly tripled since late 2016, driven by annual excise increases, while illicit product prices have remained relatively steady. The government's Illicit Tobacco and E-cigarette Commissioner had previously estimated the illicit share at 50 to 60 percent for 2024-25.

The financial consequence is stark. Federal budget documents show a significant write-down in expected tobacco...