Illicit alcohol and cigarettes will still exist after ban, says new research
As many South Africans took their first puff of a legally bought cigarette on Tuesday morning, others will stick to the cheaper illicit brands.
This is according to market research from Euromonitor, which predicts that the illicit cigarette and alcohol trade will still exist despite the lifting of the ban on sales.
“The news of the ban being lifted on the sale of alcohol and tobacco is a welcome relief for the respective industries and consumers alike. Unfortunately, the illicit trade activities in alcohol and tobacco have thrived over the lockdown with illicit traders establishing their supply networks. These networks will still be present for some time to come as the industry catches up on production and consumer sales.
“The government has lost R5bn in excise and taxes due to illicit trade activities. For cigarettes, many new low-priced brands entered the market over the lockdown, grabbing market share from the established bigger cigarette players. Illicit players will try to continue to sell these lower-priced cigarettes despite the ban,” said Euromonitor international consultant Quinton Walker.
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He said the government would have to increase its enforcement and inspection activities across the tobacco industry.
According to Euromonitor International senior research manager Thomas Verryn, SA was one of the few countries, like India, to take the drastic step of shutting down the entire alcohol industry.
“The unexpected extended total ban on alcohol sales will wreak havoc to an industry worth R293bn in 2019.”
He said EuroMonitor expected the industry to decline by more than 30% in 2020.