There are no wholly reliable numbers on the size of illicit markets. People who operate in Illicit markets do not tell Customs, or Statistics New Zealand, the size of their businesses.
Every estimate is just that. An estimate.
The latest estimate for 2024, released last week, comes from FTI Consulting, in a report commissioned by Imperial Tobacco and British American Tobacco. The report is independent, but it is not crazy to be sceptical about reports funded by industry.
But there is a simple sense-check any one of us can try. I’ve done it more than a few times.
Go to Facebook Marketplace.
If you are not in Auckland, set your region to Auckland. Search within 65 kilometres.
Type in “Double Happiness”. Use the quotation marks.
Double Happiness is a brand of Chinese cigarettes that, in 2024, was not reported as being imported by anyone who pays their excise and files returns with the Ministry of Health. There have been imports in prior years. But legal packs from those earlier years would meet New Zealand plain packaging standards and carry New Zealand health warnings.
One of the ways that people estimate the size of the illicit market is by sampling litter. Twice a year, discarded empty cigarette packs are collected from sites in the six largest cities. The packs are sorted. Some are empty packs that are legally sold in New Zealand. Some are packs legally sold in overseas markets but not sold here. And others are counterfeits or unbranded cigarettes not meant for any legal market.
FTI’s report notes the surge in illicit imports and estimates that over seven percent of cigarettes consumed in New Zealand in 2024 were “Double Happiness” – despite the lack of a legal seller of those cigarettes here. Other illicit imports, homegrown, and imported illicit loose tobacco make up the rest of the illegal market.
If your search of Facebook Marketplace yields the same results as mine, you will find about a dozen vendors. Some directly note that they’re selling darts; others try to couch things a bit. Tricky stuff – making it obvious enough for those wanting to buy illegal cigarettes, but not so obvious as to draw rebuke.
A carton of ten packs of “Double Happiness” cigarettes runs from $130 to $150 – so $13 to $15 per pack. The cheapest legal cigarettes are about $34 per pack. Excise on a pack of legal cigarettes is about $25. And smokers buying illicit cigarettes save about $20 per pack.
Amusingly, one vendor purports not to be selling cigarettes. He’s selling 10-pack cartons of Joe Bennett’s excellent book, “Double Happiness: How Bullshit Works” – a book which happens to have been designed to look like a packet of cigarettes.
The vendor also claims to have “other good hard cover books like Crown, Mountain, Red Nanjing, Red Tower is $150. For your flavour can choose Strong or Mild books.” Those are all, of course, other brands of smuggled cigarettes. The vendor is bullshitting about selling Bennett’s book about bullshitting.
I always viewed Bennett’s books as having a deceptively mild flavour – a strong message in a fun package. When asked for comment, Bennett replied, “That’s wonderful. Double Happiness as double irony.”
Facebook marketplace provides a decent sense-check on the local market. Or at least until police put an end to it.
We can also look across the ditch to headlines from Australian newspapers, where gang control of illicit tobacco and illicit vape markets regularly results in fire-bombings of shops selling for rival gangs or that refuse to play ball.
Australia regularly deports gang members to New Zealand. Avoiding entrenching an illicit market that may attract gang interest seems like a good idea.
A few things seem obviously true.
High taxes on cigarettes discourage youths from taking up smoking in the first place. They encourage people to shift to things that are cheaper – ideally, reduced-harm alternatives like vaping. And they impose indefensible cost on poor households that continue to smoke. A pack a day is $9,100 per year in excise.
High taxes also means opportunity for those happy to operate illegally. Smokers who shift to the illicit market, avoiding excise and saving about $20 per pack, may be less likely to quit or to shift to reduced-harm alternatives.
Greater enforcement seems needed. But it should not be the only response.
The coalition agreement between New Zealand First and National promised reconsideration of reduced-harm alternatives that are currently prohibited, like snus and nicotine pouches. The more smokers who shift to those alternatives, the fewer potential customers for illicit tobacco vendors.
If the illicit market is anywhere near the size reported in last week’s survey, tobacco policy needs thorough review.
The NZ Initiative’s prior reports on tobacco policy and harm reduction are available on its website.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
But there is a simple sense-check any one of us can try. I’ve done it more than a few times.
Go to Facebook Marketplace.
If you are not in Auckland, set your region to Auckland. Search within 65 kilometres.
Type in “Double Happiness”. Use the quotation marks.
Double Happiness is a brand of Chinese cigarettes that, in 2024, was not reported as being imported by anyone who pays their excise and files returns with the Ministry of Health. There have been imports in prior years. But legal packs from those earlier years would meet New Zealand plain packaging standards and carry New Zealand health warnings.
One of the ways that people estimate the size of the illicit market is by sampling litter. Twice a year, discarded empty cigarette packs are collected from sites in the six largest cities. The packs are sorted. Some are empty packs that are legally sold in New Zealand. Some are packs legally sold in overseas markets but not sold here. And others are counterfeits or unbranded cigarettes not meant for any legal market.
FTI’s report notes the surge in illicit imports and estimates that over seven percent of cigarettes consumed in New Zealand in 2024 were “Double Happiness” – despite the lack of a legal seller of those cigarettes here. Other illicit imports, homegrown, and imported illicit loose tobacco make up the rest of the illegal market.
If your search of Facebook Marketplace yields the same results as mine, you will find about a dozen vendors. Some directly note that they’re selling darts; others try to couch things a bit. Tricky stuff – making it obvious enough for those wanting to buy illegal cigarettes, but not so obvious as to draw rebuke.
A carton of ten packs of “Double Happiness” cigarettes runs from $130 to $150 – so $13 to $15 per pack. The cheapest legal cigarettes are about $34 per pack. Excise on a pack of legal cigarettes is about $25. And smokers buying illicit cigarettes save about $20 per pack.
Amusingly, one vendor purports not to be selling cigarettes. He’s selling 10-pack cartons of Joe Bennett’s excellent book, “Double Happiness: How Bullshit Works” – a book which happens to have been designed to look like a packet of cigarettes.
The vendor also claims to have “other good hard cover books like Crown, Mountain, Red Nanjing, Red Tower is $150. For your flavour can choose Strong or Mild books.” Those are all, of course, other brands of smuggled cigarettes. The vendor is bullshitting about selling Bennett’s book about bullshitting.
I always viewed Bennett’s books as having a deceptively mild flavour – a strong message in a fun package. When asked for comment, Bennett replied, “That’s wonderful. Double Happiness as double irony.”
Facebook marketplace provides a decent sense-check on the local market. Or at least until police put an end to it.
We can also look across the ditch to headlines from Australian newspapers, where gang control of illicit tobacco and illicit vape markets regularly results in fire-bombings of shops selling for rival gangs or that refuse to play ball.
Australia regularly deports gang members to New Zealand. Avoiding entrenching an illicit market that may attract gang interest seems like a good idea.
A few things seem obviously true.
High taxes on cigarettes discourage youths from taking up smoking in the first place. They encourage people to shift to things that are cheaper – ideally, reduced-harm alternatives like vaping. And they impose indefensible cost on poor households that continue to smoke. A pack a day is $9,100 per year in excise.
High taxes also means opportunity for those happy to operate illegally. Smokers who shift to the illicit market, avoiding excise and saving about $20 per pack, may be less likely to quit or to shift to reduced-harm alternatives.
Greater enforcement seems needed. But it should not be the only response.
The coalition agreement between New Zealand First and National promised reconsideration of reduced-harm alternatives that are currently prohibited, like snus and nicotine pouches. The more smokers who shift to those alternatives, the fewer potential customers for illicit tobacco vendors.
If the illicit market is anywhere near the size reported in last week’s survey, tobacco policy needs thorough review.
The NZ Initiative’s prior reports on tobacco policy and harm reduction are available on its website.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
1 comment:
Maybe this is slightly off topic, but it is to do with the price of cigarettes.
And don't even know if it's still happening - but during the covid border closure, people were offering other drugs, like marijuana and meth, as a swap to get a [tobacco] cigarette.
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