The cigarettes were found along with a stash of illegal tobacco during a raid at United Supermarket in Crowther Street, Park Village, in March last year.
Trading standards officers found 10,320 single illegal cigarettes (516 full packets of 20), 900g of hand-rolling tobacco (18 pouches of 50g) and 4kgs of a type of chewing tobacco which is banned in the UK.
The tobacco products were a mixture of counterfeit, non-duty paid or illicit cheap white cigarettes smuggled into the UK.
They were incorrectly packaged and did not bear the correct UK health warnings.
The cigarettes and tobaccos would have been worth at least £6,894 in a shop and £2,697 on the blackmarket. The minimum duty evaded was £3,802.41 and VAT was not paid.
Vakar Ahmedi, director of United Supermarket, pleaded guilty to four offences under the Trade Marks Act.
He was fined £500 for each offence and ordered to pay court costs of £1,950 and a victim surcharge of £50 at Dudley Magistrates' Court.
The court made a deprivation order against the items seized meaning the cigarettes and tobacco will be handed over to a recycling scheme to be dealt with in an environmentally friendly way.
Councillor Steve Evans, Wolverhampton Council's cabinet member for city environment and climate change, said: “
The sale of such goods harms legitimate local businesses who face unfair competition from unscrupulous retailers.
"By driving down the cost of tobacco, it is more financially attractive to young people and those on lower incomes. This has the effect of undermining the city’s public health initiatives designed to deter young people from starting to smoke and encourage current smokers to quit.
"In addition, there is a dangerous element as most illicit cigarettes do not have reduced ignition propensity features which are designed to self-extinguish cigarettes which are lit, but not actively being smoked. This safety feature was introduced to prevent fires from unattended cigarettes."
Anyone who thinks they may have been sold illegal goods or suspect someone is selling them, is asked to email firstname.lastname@example.org or visit citizensadvice.org.uk.