‘Very, very worried’: Australia’s illicit alcohol trade may soon rival tobacco black market
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The illicit alcohol trade in Australia could balloon to the point of no return and eventually rival the growing tobacco black market, industry bosses have warned.
Pubs, clubs and liquor stores in Victoria were found to be flooded with illicit alcohol in an alarming report released last month by the National Drug and Alcohol Research Centre (NDARC).
Illicit booze is flooding the market in Australia. 9News
NDARC’s investigation is just the tip of the iceberg.
Australian Distillers Association chief executive Kylie Lethbridge said the alcohol industry is flying blind as police struggle to pinpoint the source of the illicit booze.
Federal authorities including the Australian Taxation Office (ATO) and Australian Border Force (ABF) have deployed resources to trace the source of unregulated alcohol.
“What’s being done in factories without licensing and what’s being imported from offshore is something that we’re unable to point out or measure,” Lethbridge told nine.com.au.
“It’s very difficult, the same way as it’s happening with tobacco.”
Illicit alcohol can come in two forms: Spirits that have been commercially produced to avoid the high tax or booze brewed without a licence to avoid food safety or liquor regulations.
Chemical testing on some counterfeit alcohol found at Victorian retailers showed the bottles contained methanol and plastic contaminants.
Methanol is the same substance which killed Melbourne teenagers Holly Bowles and Bianca Jones, both aged 19, in Laos in 2024.
Small craft manufacturers are being undermined and will lose out as the black market grows. iStock
The bottles found to have traces of this deadly liquid are being sold at a far cheaper price point.
“We’re worried that illegal alcohol is flooding the market, not only is it potentially harmful, but is very, very cheap,” Lethbridge said.
“Our products, if you’re complying, if you’re paying the third-highest tax in the world, your spirit cannot be sold for what we’re seeing in venues and retailers.
“It’s an absolute threat to the bona fide operators, and we’re trying to work with government, the federal government in particular, and the ATO to identify and stem the issue before it gets out of control.”
Small craft manufacturers are being undermined and will lose out as the black market grows.
These operators are doing the right thing by adhering to the strict tax laws, Lethbridge said, adding that her members are “very, very worried” for their businesses.
The underbelly of illegally produced and sold alcohol has been compared to Australia’s illicit tobacco trade, which has significantly worsened over the past decade.
Illegal cigarettes seized by Australian Border Force. Penny Stephens
An estimated 80 per cent of cigarettes and nicotine products bought and consumed in Australia in 2025 were illegal, the Australian Bureau of Statistics (ABS) said.
The ABS said this has been driven by a steep increase in the excise.
While the size of the illicit alcohol market is unknown, the ATO estimates it accounted for $767 million in lost taxes in 2023-24 – the equivalent of 14 million bottles of vodka, or more than 10 per cent of all spirits consumed legally nationwide.
“We’re seeing exactly what’s happened in tobacco over the last few years now, where having very high rates of excise has allowed the illicit market to gain a foothold to the point where it now dominates,” executive director for Spirits & Cocktails Australia Steven Fanner said.
“We can’t afford to let that happen in spirits.”
It was once easy to identify a bottle of illegally produced booze.
Australia has an extraordinarily high excise on spirits, set to rise in August to over $110 per litre of pure alcohol.
Spirits & Cocktails Australia executive director, Steven Fanner. Spirits and Cocktails Australia
The goalposts are continuing to change and this has muddied the water between legitimately tax-free alcohol and illicit sales, Fanner said.
“That makes it potentially very difficult for retailers and venues to be able to tell the difference,” he explained.
“The price alone is no longer the signal of a potentially illicit product that it used to be.”
Lethbridge and Fanner joined fellow industry titans to call on the government to urgently close loopholes and reform the excise that allows bad operators to buy and sell illegal booze.
They warned the current tax arrangements will continue to foster demand for illicit alcohol and opportunistic behaviour.
“The government has all the evidence it needs that this is a problem that needs to be taken seriously now, and nip this in the bud before it goes the same way that we’ve seen tobacco go,” Fanner added.
National Alcohol and Other Drug hotline 1800 250 015
Support for families and friends of individuals experiencing alcohol or drug dependency: Family Drug Support Australia 24/7 Support Line – 1300 368 186
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