South Africa - Pretoria - 05 April 2020 - With the ban on selling cigarettes during lockdown, smokers scramble to pack and loose cigarettes.

Picture: Thobile Mathonsi/African News Agency(ANA)
South Africa - Pretoria - 05 April 2020 - With the ban on selling cigarettes during lockdown, smokers scramble to pack and loose cigarettes. Picture: Thobile Mathonsi/African News Agency(ANA)

Most of SA smokers have turned to illicit market to get their fix, study shows

By Supplied Time of article published May 22, 2020

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Most smokers have been able to buy cigarettes during lockdown, finds a recent research report published by a University of Cape Town (UCT) research unit.

However, smokers have had to pay a substantially higher price for their cigarettes. Many have had to purchase unfamiliar brands, as their favourite brands are mostly unavailable during the lockdown.

Professor Corné van Walbeek, director of the Research Unit on the Economics of Excisable Products, said they had performed an online survey of more than 16000 respondents.

The collaborators on the project were Sam Filby and Kirsten van der Zee. The aim of the survey was to understand smokers’ behaviour during the lockdown.

“Our unit has a strong public health focus and our research is often in conflict with the tobacco industry’s rhetoric.

“We do objective and rigorous research. We did not do this study to take sides with any grouping; we simply wanted to understand what was going on in smokers’ lives,” he said.

The survey was conducted between April 29 and May 11. About 41% of respondents indicated that they had tried to quit during the lockdown; 39% were successful.

Most of those who quit have tried quitting previously. Only 12% of respondents who had quit smoking successfully indicated that they would start smoking when they can buy cigarettes again.

Before the ban was imposed, the average smoker consumed 10 cigarettes a day. In the first two weeks of the lockdown, average consumption increased to 11 cigarettes, but after President Cyril Ramaphosa announced the two-week extension to the lockdown on April 9, average consumption fell to nine cigarettes a day.

Nearly 90% of smokers had stocked up before the ban became effective. But it seems that most people did not stock up enough for the extended lockdown period. More than 90% of smokers bought cigarettes during the lockdown, despite the ban on sales.

According to Van Walbeek, the distribution network through which smokers buy their cigarettes has changed considerably. Whereas formal retailers were the dominant outlets before the lockdown (56%), they have all but disappeared during the lockdown (3%).

The number of people using street vendors has risen from 3% before the lockdown to 26%, while the proportion of people relying on house shops has risen from 4% to 18%.

A total of 4% indicated that they had purchased their cigarettes through drug dealers, cigarette smugglers or blackmarket traders.

In line with the proliferation of street vendors, the percentage of people buying single cigarettes has more than tripled.

The lockdown has resulted in a transformation of the cigarette market in terms of brands. The survey results show that before the lockdown, 81% of smokers smoked brands produced by the multinational companies (MNCs), while 19% consumed brands produced by local or regional manufacturers.

During the lockdown, 63% of smokers reported smoking brands by local producers, while 37% of smokers reported smoking brands produced by the MNCs.

Whereas British American Tobacco dominated the market before the lockdown with a market share of more than 60%, the market has become more fragmented. The largest seller of cigarettes during the lockdown period is Gold Leaf Tobacco, with a 30% market share, followed by British American Tobacco with 24%, Carnilinx with 10% and Best Tobacco Company with 9%.

The average price of cigarettes reported by respondents increased by 90% from the pre-lockdown period.

Van der Zee said: “Using advanced statistical techniques, we were able to quantify which factors are associated with the price increase.”

The research team found that the wealthy reported a much larger price increase in prices.

Said Van Walbeek: “One would expect this, as rich people have more money to pay the higher prices.”

The research team found that the price of cigarettes increased by an average of 4.4% per day over the 13 days of the survey. In two weeks the average price had increased by more than 50%.

“Such increases in the price of cigarettes are consistent with hyperinflation. The fact that prices are increasing so rapidly indicates that the cigarette market is in absolute chaos.

“Smokers are desperate and are willing to pay exorbitant prices to get their fix, even if it is of an unknown source,” Van Walbeek added.

People living on farms, rural areas and towns experienced much higher price increases. “It seems that the informal and illicit distribution networks are more established in the metropolitan areas,” Van Walbeek said.

Filby, who analysed the more than 5000 responses, said: “The overwhelming response was one of anger. Respondents were unable to understand the economic or health rationale for the sales ban.

“While most acknowledged that smoking is bad for their health, they felt that the sudden imposition of the sales ban, without any cessation support, caused mental health problems.”

Van Walbeek said the ban was failing. “While the original intention was to support public health, the reality is the disadvantages of the ban greatly outweigh the advantages. People are buying cigarettes in large quantities.

“While one should not exaggerate the revenue potential of excise taxes on tobacco products since it contributes only 1% of total government revenue, it’s foolish to not collect that revenue. The current sales ban is feeding an illicit market that will be increasingly difficult to eradicate”

* The report with the full results is available at www.reep.uct.ac.za

Communication and marketing department on behalf of the research unit on the Economics of Excisable Products, UCT.

Cape Argus

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