In August this year, British American Tobacco South Africa announced that the illicit cigarette trade in the past year comprised 70% of the total market in South Africa but, according to a new study by University of Cape Town PhD candidate Nicole Vellios, BATSA’s estimate is wrong.
“Since 2009, the illicit cigarette market has increased sharply, and by 2017 illicit trade accounted for 30% to 35% of the total market. By 2020, illicit trade was around 54%. The illicit market was greatly stimulated by the 20-week sales ban in 2020, when no cigarettes were sold legally and when the government received no excise revenue for cigarettes. In 2021, the illicit market remained at around 54%,” says Vellios.
“A shop that sells illicit cigarettes is likely to also sell legal cigarettes. It is misleading to say that 70% of the market in Gauteng is illicit. BATSA should rather be saying that 70% of stores that it sampled in Gauteng sold illicit cigarettes. This is much more accurate,” she writes. The tobacco industry in South Africa, and globally, often argues that high excise taxes cause smokers to turn to the illicit market, and that excise taxes should therefore not be increased. In South Africa, says Vellios, there is no evidence that excise tax increases are linked to an increase in illicit trade.