Nicotine consumption in Australia surged about 40% between 2017 and 2025, significantly outpacing the country's 14% population growth over the same period [1, 2]. By 2025, around 80% of all nicotine consumed came from illegal tobacco products, up sharply from approximately 10-12% in 2016-2017 [1, 2].

This rise is largely attributed to the expanding illicit tobacco market and increased use of e-cigarettes and other nicotine alternatives [1]. Even as prices for legal cigarette packs tripled to between A$40 and A$60, many smokers shifted to illegal products costing less than half that amount [2]. As a result, overall household spending on cigarettes returned to levels similar to 2016 despite these price hikes [1].

Australia’s tobacco excise taxes increased annually by at least 12% from 2013 through 2020 [2]. These high excise rates have pushed consumers towards illicit sources, sharply reducing government tobacco tax revenue to its lowest point in 14 years and causing a A$6.9 billion budget shortfall [1].

New South Wales Health Minister Ryan Park described the situation as a "public health failure" that has forced states to allocate more resources to enforcement and healthcare. He said, "As we face one of the toughest cost-of-living challenges in living memory I can only see excise-free products become more and more attractive" [1]. Park criticized the federal tobacco excise system for creating disparities that favor illicit trade [1].

The Australian Bureau of Statistics released experimental data on June 3, 2026, using new methods including wastewater analysis combined with tobacco sales and tax data to estimate the illegal tobacco consumption reliably [1, 2].

The shift to illegal tobacco has sharply changed the market, with illicit products making up a dominant share of nicotine consumed by 2025. The government is now facing mounting budget challenges due to lost excise revenue and increased enforcement costs.

The next update is expected as further analysis of tobacco consumption data and enforcement measures unfold in coming months [1, 2].