Source: Radio New Zealand
Black market cigarettes are being brazenly sold at heavily discounted prices in Auckland, undermining one of the biggest barriers to smoking – the cost.
The illicit packets of cigarettes and bags of loose tobacco have none of the scary health warnings and carry no information about quitting.
They are typically sold at prices that fail to include the hefty excise tax on tobacco, which Customs says amounts to $30.13 on a packet of 20 cigarettes.
Customs says organised crime is involved, and dairy owners warn it’s only getting worse.
Customs excise duties are taxes added to tobacco and other potentially harmful products.
However, the price of tobacco products being sold on the black market is typically less than half the excise duty that must be paid.
Importing cigarettes without paying the excise duty is illegal, and offenders can be charged with defrauding customs revenue.
It’s also illegal for retailers to sell illicit cigarettes, with offenders facing a six-month prison sentence, a $20,000 fine or both.
Given the stiff penalties business owners face for selling such products, it’s somewhat surprising to find them being sold over a shop counter in suburban Auckland.
Nestled between a hardware shop and a massage parlour, the store in an East Auckland shopping centre looks like any other.
Inside a glass-topped front counter are packets of cigarettes for sale.
The prices of the cigarettes are written on the packets in black marker, ranging from $13 to $15 – less than a third of the usual price.
A screenshot of a video of tobacco products that has been posted on Facebook. Facebook
The East Auckland store is one of a number of outlets in the country’s largest city that RNZ believes is offering illicit tobacco products for sale.
Not only do the products avoid excise tax the government could use in the health system to treat conditions related to smoking, but they also hurt the profit margins of small business owners offering legitimate tobacco products.
Tara Singh Bains, owner of several retail stores in the Auckland suburb of Manurewa, said it was hard for small business owners not to be tempted by the price differences.
“Every pack of 20 cigarettes we sell is priced between $36 to $40, with margins of just $3 or $4,” Bains said.
“Whereas a pack of illegal cigarettes – mainly smuggled from China, including the most popular brand Double Happiness – is sold at $13 to $15. Here the margins can be anything between $8 and $10 per pack,” he said.
“This solid profit, along with the involvement of organised crime groups, is the main reason contraband cigarettes are being brazenly sold across Auckland,” he said.
“People like us who … are doing the right thing are approached regularly by people distributing illicit cigarettes and encouraged to join multiple outlets engaged in this illegal activity.”
Daljeet Singh Sidhu, a retailer based in Papakura, claimed the black market for tobacco products in Auckland was an open secret.
“The surprising thing is everyone in the business community knows who is engaged in selling illegal cigarettes, [but] no action is taken against them,” Sidhu said.
“This lukewarm attitude of authorities is ensuring compliant retailers are weakened, while rogue retailers expand and organised crime gains a stable cash engine.”
Sidhu claimed legitimate businesses had experienced a drop in revenue of more than 75 percent for tobacco sales over the past six months or so.
Himanshu Parmar, vice chairperson of Dairy & Business Owners Group that represents more than 5000 entities nationwide, said members had increasingly complained of how readily available black-market cigarettes had become.
“A number of dairy owners in particular have reported significant hardship because they have chosen not to participate in what has become a very prevalent illegal tobacco sales network,” Parmar said.
“Importantly, this also affects other impulse purchases that typically accompany tobacco sales, such as confectionery, drinks and other small retail items,” he said, noting that the combined sales were a critical part of a store’s daily revenue.
“Successive governments have placed significant emphasis on plain packaging and health warnings to highlight the risks associated with smoking,” he said.
“Illegal cigarettes typically bypass these regulations and do not carry the required warnings about the dangers of tobacco use.
Parmar said adulterated tobacco products were particularly worrying.
“Because these products are part of an illegal supply chain, there are serious concerns about the quality and contents of the tobacco itself,” he said.
“Consumers simply do not know what additional chemicals or harmful substances may be present.”
In 2011, Canada’s national police force warned that adulterated cigarettes could contain significantly more cadmium, lead, tar and carbon monoxide than standard cigarettes.
The issue doesn’t appear to be confined to Auckland.
Jay Patel, owner of a dairy in Hamilton, said his cigarette sales had plummeted in recent months.
“Everyone is selling – why are you not selling?” Patel said, repeating a question he often gets from his customers.
“As a result, my cigarette sales have dropped by almost 80 percent in the past three or four months.”
Patel called for harsher penalties to be introduced, with undercover operations increased to catch those selling illicit cigarettes red-handed.
“The fine for selling illegal cigarettes should be something to the tune of $10,000 or more,” he said.
“The current fines, which these retailers engaging in illicit tobacco trade earn in a day, is nothing more than a slap on the wrist.”
Several retailers in Auckland – who all spoke on condition of anonymity – said they had made multiple complaints about illicit tobacco products to authorities, as well as to their local boards and Takanini MP Rima Nakhle.
RNZ has approached police, Health New Zealand and Ministry of Health for comment on the issue, but they all deferred questions to Customs.
Customs acknowledged that tobacco smuggling had become more organised, large scale and sophisticated.
This came amid warnings New Zealand’s illegal tobacco market would become as bad as Australia’s.
Robert Beaglehole, chair of anti-smoking group ASH, said while it was in smokers’ interests to buy cheaper smokes, it carried risk.
“The danger of that, of course, is that the illegal trade grows and, as we’ve seen in Australia, gets totally out of control,” Beaglehole said.
Beaglehole said an illegal tobacco market could lead to a decline in tax revenue used to fund the very health system that smokers might one day be forced to rely on.
Nigel Barnes, chief customs officer for fraud and prohibition, said seizures figures had been trending upwards for the past decade.
In 2025, Customs seized 11.1 million illicit cigarettes and cigars.
Just 9.2 million illicit cigarettes and cigars were seized in 2024, 8.48 million in 2023 and 4.8 million in 2022.
Seizures of illicit cigarettes and cigars in 2017 amounted to just over 3 million.
Barnes said the illegal tobacco industry was part of the organised crime ecosystem.
“These aren’t opportunists, they’re organised criminal groups by definition,” Barnes said. “It will typically involve multiple people, and there is a lot of money involved.”
Barnes highlighted the price differential between legitimate and illicit tobacco products.
“If they had paid the excise, they’d be selling you that at a massive loss, which is highly unlikely, so that’s a strong indicator that [it’s] illicit tobacco.”
Nakhle said she was concerned by the reports of an increase in illicit cigarette sales in South Auckland.
“This is both a crime issue and a health issue, and it is something that communities in Takanini and across South Auckland are right to be concerned about,” she said.
“People selling cheap, illegal cigarettes are not doing our communities any favours. These actions make smoking more accessible, particularly in lower-income areas, and that cuts across the work that has been done by our government to help people quit.”
Nakhle pledged to continue raising the issue with police and her parliamentary colleagues.
Manurewa Local Board member Marshal Ahluwalia said numerous dairy and small business owners in his area had raised concerns about how the illicit tobacco products were harming their businesses and creating unfair competition for those who followed the law.
“Illegal cigarettes are cheaper, which encourage people to smoke more,” Ahluwalia said.
“Authorities need to take stronger enforcement action,” he said. “At the same time, agencies … should actively confiscate these products and ensure they are removed from the market.”
Meanwhile, retailers pointed to the emergence of “pop-up dairies” that act as fronts for illicit tobacco sales in their complaints to authorities.
Parmar claimed such shops typically displayed basic grocery items worth a total of $1000, with the real focus being the sale of illicit tobacco products to locals.
“I am aware of a small town in South Waikato that now has one of these so-called pop-up dairies,” Parmar said.
“Local retailers have raised concerns with police, but no action has been taken. They were instead advised to contact the health department, which unfortunately has led nowhere so far.”
Customs warned retailers to refrain from selling illicit tobacco products.
“Engaging in the illicit tobacco market … potentially exposes [them] to other organised crime risk types, so it’s to be avoided,” Barnes said.
Parmar urged retailers selling illicit cigarettes to think about the harm they were causing.
“Our advice to anyone involved in selling illegal tobacco is simple: stop immediately,” he said. “It is not worth risking prosecution that could ultimately prevent you from operating a business at all.”
Ahluwalia called on business owners to think about the impact on the wider community.
“No profit is more important than the health and wellbeing of our communities,” he said. “So please just stop.”
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand