Dairy owners should stop selling cigarettes "if they feel too threatened" by robbers, says Associate Health Minister Nicky Wagner.
A packet of 20 cigarettes will cost about $32 by 2020, after four legislated 10 percent year-on-year price rises.
Dairy owners say the price hikes are making cigarettes more and more enticing for thieves.
Ms Wagner said cigarette sales might be more appropriate for liquor outlets.
"Maybe we should sell them with alcohol because the security systems in an alcohol convenience store is usually much higher than [in] a dairy," she said.
A spate of recent violent robberies on Auckland dairies and liquor stores has seen dairy owners complain that workers and customers felt unsafe in their shops.
In one recent case, five men stole $6000 worth of loose tobacco from the Avondale Food Market in Auckland in less than one minute.
The robbery was caught on CCTV last month, and store owner Raj Patel said it seemed like "organised crime".
Mr Patel and several other dairy owners told Checkpoint with John Campbell they believed thieves were stealing tobacco to illegally on-sell.
Sunny Kaushal - founder of the Crime Prevention Group - said he believed the government was partly responsible for the tobacco black market.
"Cigarettes are definitely one of the attractions because if you look at the value, and these offenders, when they are picking up those boxes of cigarettes, they are not going to consume them themselves.
"It's going to the black market, and that's where the whole cycle is starting."
Superintendent John Tims said police were offering safety audits to dairy owners.
"In the past three weeks, police officers across Auckland have visited over 930 business owners.
"We have also had hundreds of business owners turn up to safety seminars held across the three police districts," he said.
The McKinstry Avenue Superette in Mangere was violently robbed by three men armed with hammers about 9.30am in January this year.
Caught on CCTV, Kamalpreet Singh was caught in a minute-long violent brawl with the robbers.
"It's only 'cos of the smokes going up every year, the government wants to make a smoke-free country, but people don't have money to spend on the smokes, so they rob the smokes."