A public health expert is accusing two of the world's largest tobacco companies of misinformation and overinflating the illicit market here in their fight against aspects of proposed smokefree legislation.
British American Tobacco and Imperial Brands Australasia recently told the Health Select Committee the illicit tobacco market here was about 11.5 per cent of total consumption.
Their submissions on the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill suggested the illicit market was growing year on year and would be exacerbated by the proposed legislation, which aims to create a "smokefree generation".
University of Otago public health expert Professor Nick Wilson said his own team's latest research placed the figure at less than half the rate promoted by the tobacco companies.
"They are pushing misinformation. It is the same industry behaviour we have seen for many years, one of constantly opposing all tobacco measures and exaggerating risks of taking any action."
The companies have refuted these claims and disputed the findings, saying their research paid greater attention to an illicit market for loose tobacco, which can be legally grown at home here (up to 5 kilograms) but not sold.
The industry's illicit market figure was also much higher than other studies.
A study by Action for Smokefree 2025 (ASH) from 2010 to 2013 estimated the illicit market to be between 1.8 and 3.9 per cent.
A similar study in 2012/13 found 5.8 per cent of 1673 littered packs were foreign.
NZ Customs told the Herald it estimated illicit tobacco currently made up around 6-7 per cent of tobacco consumed in the country.
The University of Otago study, provided to the Herald, was conducted between May 2021 and April 2022 while the borders were mostly closed, which authors said provided the best estimate as it did not capture discarded legal packets from travellers.
Researchers collected 1590 discarded tobacco packets from across the country, with 36 of them found to be from overseas/smuggled. The vast majority were in Auckland and a smaller number in Wellington.
After adjusting for the population they came to an estimate that 5.4 per cent of cigarettes being consumed had been smuggled into the country. The study has been peer-reviewed and published by the British Medical Journal.
British American Tobacco and Imperial Brands Australasia respectively make up about 60 and 30 per cent of the New Zealand tobacco market, worth nearly $3 billion in 2021 (for comparison New Zealanders spend about $5b a year on alcohol).
Representatives of both companies stated they supported the ambition of the bill but were concerned about aspects of it, including relying on reducing nicotine in cigarettes to encourage people to quit.
They also said there was a rising illicit market in the country and smokers would turn to this once legal avenues had been reduced.
Representatives of both companies told the Herald they stood by the figures produced in their reports, which they'd commissioned KPMG to produce.
They estimated the market share of illicit tobacco increased from 9.2 per cent in 2017 to 10.2 per cent in 2018 and 11.5 per cent in 2019.
Imperial Brands Australasia head of compliance and regulatory affairs, Gary Dickson, said their report methodology included various aspects, including a "litter survey" along with interviews and an online and phone survey.
The "litter survey" aspect returned similar results to Wilson's study, with the latest data showing about 6.2 per cent of cigarette packets being from an illicit market.
However, their total figure was bolstered by what he said was the biggest issue - an illicit market for loose tobacco, which can be legally grown at home here (up to 5kg) but not sold.
About 30 per cent of legal consumption is loose tobacco, or "roll your own".
Wilson said he believed the industry was overinflating that issue and while concerning, the black market was relatively small on a world scale and not increasing despite increased taxes and regulation.
"There is definitely a homegrown market. You can see people trying to sell it online and selling seeds and stuff.
"But in interviews we have done, smokers have said it is 'ghastly'. It is raw tobacco, without any additives, so it is pretty rough stuff.
"Plus the New Zealand climate is not the most conducive to growing tobacco. It is a very niche market."
Wilson said he was also sceptical of relying on reports paid for by the industry, which had not been peer-reviewed and were prepared solely for the companies themselves.
The reports included the disclaimer they had "not been prepared for the benefit" of "those who work in or monitor the tobacco or public health sectors or those who provide goods or services to those who operate in those sectors".
"It sounds like KPMG itself is warning it should not be relied upon in this manner," Wilson said.
"These are companies that only recently accepted tobacco kills people, despite this being a known fact for over 60 years."
Wilson said he did not dispute the fact the illicit market needed to be addressed.
Their research found the black market to be concentrated in certain suburbs in Auckland - 15 per cent of all packets - and foreign packets originating mostly from China and to a lesser extent South Korea.
Wilson said there could be more targeted enforcement in those areas and for goods coming from those countries, alongside a more comprehensive system.
A Customs NZ spokesman said estimating the size of the illicit tobacco market in New Zealand was, by its nature as an illicit market, "difficult to do".
Customs did not have data on the volume of illicit product being sold in New Zealand, but believed the KPMG figure is likely "over-estimated" and that the ASH estimate was likely "underestimated" given changes in the interceptions at the border over recent years.
"Customs considers that an estimate of around 6 to 7 per cent is likely nearer to the mark," he said.
Customs data shows the amount of illegal cigarettes and tobacco seized at the border fluctuates greatly, from nearly 5 million cigarettes in 2019 to nearly 11 million in 2020 and back down to under 3 million in 2021.
In the first six months of this year, nearly 3.5 million cigarettes had been seized at the border.
For context, in 2021, 1.5 billion cigarettes were legally sold in New Zealand and 377 tonnes of loose tobacco.
The Customs spokesman said the Government in Budget 2022 allocated $10.4m over four years to target illicit tobacco activity.
"Customs continues to work with enforcement partners here and overseas to detect and disrupt criminal operations involved in illicit tobacco," he said.
The smokefree bill would mean people aged 14 and under would never be able to legally buy tobacco and it would also dramatically reduce nicotine levels - both world-first initiatives.
It is part of the country's aim to reduce smoking overall to 5 per cent of the population by 2025.
The Government, which has a parliamentary majority, intends the law to come into effect next year.
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