BAT leaders caution that EU tax hikes may recreate Australia’s ‘black market expansion’ scenario.

Oct.14.2025

BAT leaders caution that EU tax hikes may recreate Australia’s ‘black market expansion’ scenario.

BAT execs warn that steep EU tax hikes on cigarettes and alternatives could spur an Australia-style surge in illicit tobacco, arguing smugglers profit even if 24 of 25 containers are seized; the European Commission disputes this view.

Key takeaways：

BAT executives say aggressive tax hikes in Europe could fuel illicit trade, citing Australia as a cautionary tale;
Illegal and non-compliant e-cigarettes are identified as major black-market drivers;
The “24/25 containers” point: even intensive seizures may not erase profits;
BAT says it will work to ensure at least smoke-free alternatives remain accessible and affordable;
The European Commission disagrees, stressing its policy goals and pathway.

2Firsts, October 14, 2025 — Citing EURACTIV, British American Tobacco (BAT) executive Kingsley Wheaton said that if Europe’s debate over higher taxes on tobacco and novel nicotine products results in steep increases, the outcome could mirror Australia’s experience: a squeezed legal market alongside an expanding black market and non-compliant products. Wheaton called it an “Australia-style story”—regulation “controlled the legal market” but did not effectively tackle criminal networks and non-compliant vapes.

Illustrating smuggling economics, Wheaton argued that even if authorities intercept 24 out of 25 containers at the border, criminals can still cover costs and make money on the one that gets through—showing the resilience of illicit trade when high tax differentials meet enforcement limits. He added that BAT will strive to keep smoke-free alternatives available and affordable, citing public-health considerations.

The European Commission does not accept this assessment. According to the report, the Commission remains unconvinced that higher taxes necessarily boost illicit trade and emphasizes its policy framework and regulatory objectives. The debate overlaps with ongoing EU-level reviews of taxation for tobacco and alternatives.

Cover image: Laurent Coust/SOPA Images/LightRocket via Getty Images.

References:

[1] British American Tobacco boss: Europe risks becoming Australia on illicit trade

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