Illicit tobacco is booming. But are more Australians really smoking?

More Australians are non-smokers than ever, despite a booming illicit tobacco trade enticing remaining smokers to consume more nicotine at cut-rate prices.

The Australian Institute of Health and Welfare’s latest National Drug Strategy Household Survey found a shrinking pool of people using any nicotine products, and the rates of daily smokers is at a historic low of 5.6 per cent. Vape use was also dropping.

But the survey of more than 17,500 people conducted from June to December 2025 found more than one in three smokers (34 per cent) said they had bought illicit tobacco (sold for as little as $5 a pack) in the previous three months – more than double the proportion in 2022-2023.

More than half of these smokers (57 per cent) bought their illegal tobacco at tobacconists, as the federal, state and territory governments spend more than $300 million to combat the booming illegal trade.

Since November 2025, NSW Health has issued 347 short-term closure orders and seized 20.5 million illicit cigarettes and 214,000 illegal vaping products in the past financial year, with an estimated value of $30 million.

Meanwhile, tax revenues have collapsed while violence connected to the illegal trade and organised crime syndicates has surged.

Tobacco smoking is the leading cause of preventable death in Australia, responsible for 24,000 deaths annually and roughly 13 per cent of all deaths nationally.

A separate analysis of the nation’s sewage published in June estimated that 80 per cent of nicotine consumed nationally was illicit, up from 12 per cent in 2017.

Nicotine consumption grew 40 per cent in the same period, with most of this increase occurring since 2021. This included nicotine replacement therapy for people trying to quit smoking.

The AIHW report released on Friday showed that 5.6 per cent of Australians aged 14 and over said they smoked daily (about 1.3 million people) - down from 8.3 per cent in 2022-2023 and 19.5 per cent in 2001.

Overall, the proportion of people who used nicotine of any kind dropped from 17.4 per cent in 2022–2023 to 15.2 per cent in 2025, driven by declines in smoking and e-cigarette use.

Acting NSW Health Minister Paul Scully said the data was encouraging, but warned the illicit trade risked undoing a century of work to reduce smoking rates.

But Professor Becky Freeman, a public health and prevention expert at the University of Sydney, said the data show that tobacco control was still working.

“Tobacco industry-led campaigns that [say] tobacco control has failed, that illicit tobacco is going to wipe out decades of public health work, just simply aren’t true,” Freeman said.

Meanwhile, smokers who switched to illicit products tend to smoke more of the incredibly cheap and readily available stock, and growing evidence suggested the number of people who were using three or more nicotine products was rising.

Freeman said governments must continue to crack down on the trade and introduce minimum licensing standards for retailers, given that 60 per cent of the 165 NSW stores currently shuttered for selling illicit tobacco were licensed.

“Why is it that you can just fill out some paperwork, pay a small fee, and then you’re allowed to legally sell tobacco products? This is a deadly product,” she said.

Scully did not respond to a question about minimum standards. In a statement, he said NSW’s tough penalties and enforcement measures would continue playing “whack-a-mole with bad actors” so long as the federal government’s “excessive” tobacco excise remained.

Some 3.6 per cent of people said they used e-cigarettes daily, about the same as in 2022-2023 (3.5 per cent), while fewer reported using vapes, or e-cigarettes, weekly or monthly, resulting in an overall decline.

Vapes were still most common among young people, with 8.3 per cent of 18- to 24-year-olds saying they used them daily compared to 9.3 per cent in 2022-2023. But the number of less frequent users dropped from 11.3 per cent to 5.8 per cent.

Oral nicotine pouches (small, tobacco-free sachets placed between the lip and gum) were used by 1.8 per cent of people surveyed in the previous year.

They were also most popular among 18- to 24-year-olds, with 8.4 per cent reporting they used the pouches, and 3.8 per cent saying they used snus (smokeless, moist tobacco placed under the lip).

Despite the surge in illicit tobacco, Freeman said the report was “good news” overall: “This shows that tobacco control is continuing to work.”

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