The Extent of the Illicit Cigarette Market in Australia: Using Publicly Available Data in a ‘Top-Down’ Approach to Estimation

Abstract

There have been several recent attempts to estimate the size of the Australian illicit tobacco market. The two most recent studies have provided significantly different results, with the Australian Taxation Office (ATO) arriving at an estimate of 5 per cent as the extent of the illicit component of the market, while a tobacco industry–funded approximation conducted by KPMG has suggested this figure to be 14.1 per cent. This paper investigates whether a new methodology for undertaking such an estimate could produce more accurate results and examines publicly available information to explore if there are datasets that could help determine which estimate of the illicit market may be more accurate. The resulting ‘top-down’ approach identifies an estimate lying between the ATO and KPMG estimates, although it is limited to the illicit cigarette market in Australia. Implications of the results are discussed, and suggestions for further research are presented.