Retailers ponder quitting ciggies as illegal sales soar
Supermarkets are considering a once-unthinkable move to ditch tobacco from their shelves as the illicit trade makes stocking up on cigarettes almost impossible.
The sheer scale of the loss of legal sales and retailer revenue is clear from financial reports released this season.
Quarterly data published by Woolworths on Wednesday showed sales fell 51 per cent compared to the same three months in 2024, while Coles sold 30 per cent less tobacco in the last financial year.
Sales at Metcash wholesalers have nearly halved compared to four years ago; Tobacco now represents only 17 percent of sales, a decline of $1.3 billion.
Viva Energy, which operates 1,000 gas stations across the country, announced this week that its sales fell 12.5 percent in the latest quarter, blaming it on the federal government’s recent changes to packaging legislation.
These changes include new anti-smoking messaging both inside and outside the packs, as well as excise increases that now amount to $1.50 per cigarette stick.
Were it not for the rapid expansion of the underground discount tobacco industry, the decline in sales might have been celebrated as a public health success.
According to one study, under-the-counter trading accounts for 39 percent of sales. consultant report This report for the tobacco industry shows that Australians have no qualms buying cheaper, unregulated products.
Some studies – included Western Australia — they prove that cheap cigarettes breed cigarettes, as many anti-smoking advocates anecdotally feel. First increase in smoking rate in one generation.
Police link the illegal tobacco trade to multinational criminal organisations.
Fred Harrison, chief executive of the IGA-affiliated Ritchies supermarket group, which includes 82 grocery stores and 72 liquor stores in three states, is witnessing the collapse.
“We have seen our tobacco sales decline from $300 million over the last four years, we are on track to reach approximately $60 million this fiscal year,” he said.
“If people quit smoking and move away from tobacco, we will take it for granted.
“But we know that cigarette consumption has increased dramatically… and it’s all going into the illegal trade, and that makes me extremely sad.”
Mr. Harrison, a 50-year veteran of the industry, said liquor stores have begun removing cigarettes from their shelves and will next consider doing so from supermarkets.
“We’re out of 25 of our 72 liquor stores… Sales don’t warrant it when you have $25,000 (in stock) there and you’re doing $300 a week in sales,” he said.
“We will be reviewing a number of supermarkets in the new year. There are probably six to 10 supermarkets that we say should not be part of our offer.”
“It’s frustrating when it’s a legitimate product and you’re sick to death of letting the bad guys win.”
Mr Harrison is hitting out at the Victorian government for failing to join other states in passing specific laws to combat illegal tobacco, targeting landlords of illegal tobacco dealers and threatening businesses with closures and fines.
At this year’s Metcash AGM, CEO Doug Jones also described the “effectiveness of various law enforcement initiatives” as “disappointing to say the least”.
IGA stores are also involved in lobbying for larger fines to be imposed on landlords who house illegal tobacconists, as has been legislated in NSW and Queensland.
While Ritchies has begun phasing out tobacco, it’s unclear whether the supermarket duo will follow suit.
In response to questions from AAP, Woolworths said this had not yet been done, while Coles did not respond.
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