Recent research by the University of Cape Town has found that the price of cigarettes sold illegally has skyrocketed even further during the period of segregation and while the ban is a fad for illegal traders’ pockets, there is little public health interest.
The researchers argue that the ban was misplaced after level 5 of the isolation regulations and should be lifted immediately.
They found that as a way to get smokers to quit, the ban now served its limited purpose and 70% of those who quit smoking did so before 2 May (during level 5 of segregation). ŉ Study done in the first five weeks of the isolation period showed that only 16% of smokers quit the habit.
Prof. Corné van Walbeek, director of the research unit on the economics of excise products at the university, said the intended isolation benefit to encourage people to quit smoking was largely realized at level 5. The percentage of respondents who quit after that is bitterly small.
The number of respondents who said they now regularly share cigarettes increased from 1.7% to 8.9% while the price of cigarettes in some cases is up to 250% more than market prices before the isolation period.
“The average price per cigarette was R5,69 or R114 per pack of 20. Some respondents reported prices of up to R300 per pack of 20 cigarettes or R3 000 per carton of 200 cigarettes. This is significantly higher than the 90% increase in cigarette prices observed in earlier research in May. ”
The research was conducted in early June over a two-week period and 23,000 respondents participated online. The research was funded by the Bill and Melinda Gates Foundation, the World Health Organization (WHO) and the South African Medical Research Council (MRC).
In a summary of their research, the research team says the ban is being undermined by the evidence they have found.
“The authors of the report argue that the intention of banning sales, in terms of quitting smoking and reducing the spread of Covid-19 through the sharing of cigarettes, is undermined by the fact that so many people still smoke, as well as by the increasing use of cigarettes. ”
They believe the extension of the isolation period after level 5 was misplaced and recommend that the ban be lifted immediately. The ban has already given the illegal market a significant boost. Illegal distribution channels are becoming more and more established and this will have lasting public health and economic consequences.
The study found that before the isolation period, 53% of cigarettes were sold by formal retailers, but this has now dropped to 0.3%. Most cigarettes are now sold through so-called informal channels such as spaza shops and street vendors. They are responsible for about 36% of continuing sales at this stage.
The researchers found that the government lost about R1 billion in revenue every week from the ban. The formal tobacco market has already been greatly destabilized.
“The ban on tobacco products during the isolation completely overturned the cigarette market. This market has completely changed, ”said Van Walbeek.
“While multinational corporations previously dominated the market, their share of sales has now dropped to less than 20% of those surveyed. Most of our respondents have been forced to change brands and a large part [of the brands] are manufactured locally. ”
More than half of all cigarettes purchased by those who participated in the study are trademarks of companies in the Fair-Trade Independent Tobacco Association (Fita) stable. These include the Gold Leaf Tobacco Corporation, Carnilinx and the Best Tobacco Company.
British American Tobacco (Batsa) has fallen back to fifth place and its brands now represent only 9% of what respondents bought.
“Manufacturers that previously operated in the shadow of the multinational companies have significantly increased their market share among those who took part in the survey. “There will probably be a price war when the ban is lifted,” the researchers found.
The international companies are likely to try to regain that market share. Their local competitors, which have been boosted by the profits made during the isolation period, will again want to cling to their market share. Prices are therefore expected to fall to what was seen before the seclusion period.
Nearly seven million South Africans are smokers.
Both Fita and Batsa are currently involved in court cases to have the ban lifted.