The shops have been popping up along the main street in the past 12 months, nestled among the Victorian-era buildings, bakeries and pubs."Most people don't want to put a target on their back," says Mat Evans, who runs a wholesaling business on the New South Wales South Coast.Mr Evans is now the only wholesaler supplying cigarettes to service stations, stores and hotels across the region. The others have either bailed out or gone broke.
Under-the-counter cigarettes are being imported illegally in vast quantities and are being sold tax-free, at stores across the country, for half the price of their legitimate versions.In Bega, a town of 5,000 famous for its cheese, cigarettes have long been sold at the major supermarkets, petrol stations and standalone tobacconist.
"It is so lucrative, the margins are so big that are seen as a cost of doing business," Mr Allen says. Smokers are switching to under-the-counter cigarettes, he says, because they are easy to find and so much cheaper than the legitimate versions. In 2018, 400 million cigarette sticks were seized at the border. Last year, that figure blew out to 1.7 billion.Some estimates suggest as many as one in three, or one in four, tobacco products consumed in Australia are now purchased through the black market, and it is blowing a multi-billion-dollar hole in the federal budget.
David Allen owns the Cobargo Hotel and says tobacco retailers need to be licensed to bring the black market under control.It is a question David Allen is also asking as he watches cigarette sales at his hotel fall by 30 per cent in a year, despite smoking rates remaining largely unchanged.