Sarah McMillan/cvnznews.com
New Zealand’s illicit tobacco market has surged to its highest level on record, with a major new report warning the country is “rapidly losing control” of the problem. Research by FTI Consulting, commissioned by Imperial Brands NZ, BAT New Zealand and Philip Morris NZ, estimates that one in three cigarettes consumed in 2025 will be illicit.
The report found 33.5% of all tobacco consumed this year is illicit, up sharply from 27.2% in 2024 and 23.6% in 2023. While most illegal product entering the country remains contraband cigarettes—primarily Chinese‑market variants—researchers also identified a steep rise in illicit loose‑leaf tobacco, mirroring increased Customs seizures at the border.
A BAT New Zealand spokesperson says the trend mirrors the collapse of Australia’s regulated market. “New Zealand is rapidly losing control of the illicit tobacco market. One in every three cigarettes now consumed is illegal – that’s a tipping point we cannot ignore.”
Australia’s illicit tobacco trade has become a multi‑billion‑dollar criminal enterprise, with firebombings, extortion and violent turf disputes now common as organised crime groups fight for control. The report warns New Zealand risks the same trajectory without stronger enforcement.
The financial impact is already significant. FTI estimates $817 million in lost excise and GST revenue last year alone. Despite Ministry of Health data showing daily smoking rates stabilising at 6.8%, Budget documents revealed excise receipts to 31 March 2026 were $210 million (17.1%) lower than the same period a year earlier.
Researchers say cost‑of‑living pressures and rising tobacco prices are driving smokers toward cheaper illicit products, some selling for under $20 a pack—prices not seen since the 1990s. These products do not carry health warnings or comply with plain‑packaging rules, undermining more than a decade of tobacco‑control measures.
“In Australia, the easy availability of illicit tobacco is contributing to rising smoking rates,” the BATNZ spokesperson said. “We should expect the same here unless availability is addressed.”
The industry has welcomed the Government’s move to establish an illicit tobacco action group and boost border capability, but says tougher penalties and enforcement powers are now essential.
