Australia is facing a crisis in tobacco regulation.
What was once a health policy designed to reduce smoking has now created a $5 billion black market that is fuelling organised crime, violence, and a growing threat to legitimate retailers.
According to recent reports, illicit tobacco now accounts for as much as 40 per cent of the market. Treasury has downgraded expectations for tobacco excise revenue by billions of dollars, despite tax hikes that have pushed legal cigarette prices to record highs. The result has been devastating: firebombings of tobacconists and convenience stores, the involvement of organised crime networks, and a playing field tilted against law-abiding retailers.
Economists and police alike warn that Australia has become a global “worst case study” in tobacco policy.
“Every scrap of evidence shows that once a black market is entrenched, it becomes nearly impossible to unwind,” noted economist Chris Richardson. While the government pledges more enforcement, experts argue that current efforts are only scratching the surface of a deeply entrenched criminal supply chain.
For independent petrol station operators, the consequences are very real. Declining legal tobacco sales, increased competition from illicit suppliers, and ongoing risks of theft and shrinkage all impact profitability. Tobacco has long been a key traffic driver, with cigarette buyers often purchasing food, drinks, and lottery products in the same visit. When those customers turn to the black market, operators lose far more than cigarette sales.
This environment makes protecting legitimate tobacco stock more critical than ever.
Secure dispensing technology, such as VDMS solutions, provides operators with critical safeguards. By storing products in secure under-bench or display units, theft is dramatically reduced, staff processes become more efficient, and insurers recognise the lower risk profile.
As Russell Davies from VDMS often points out, protecting the tobacco category is not only about reducing shrinkage, it’s about enabling operators to focus on service, compliance, and building sustainable businesses.
While governments debate taxation and enforcement, independent retailers can take practical steps today. Investing in security solutions like VDMS ensures that every legal sale counts and that operators are not left vulnerable in an increasingly volatile market.
For service station owners, safeguarding tobacco isn’t just about compliance; it’s about protecting margins, reducing risk, and securing the future of their business.