On 27 November 2018, the Tobacco Institute of Southern Africa (TISA) hosted an event to brief the media on illicit tobacco trade in South Africa (SA). This follows after a similar briefing was hosted on 5 July 2018. Click here to read about this briefing.
With the help of Ipsos, a market researcher, TISA has been able to prove that the illicit tobacco trade is rife in SA and has even increased since first exposing the matter. Despite presenting parliament and SARS with the information, illegal trade has just increased, and nothing has come of their promises to rectify the issue.
According to Francois van der Merwe, chairman and CEO of TISA, SA has become the first country in the world to allow an illegal cigarette brand to become top seller. In the past three months, RG, a popular illegal cigarette brand, has superseded Peter Stuyvesant, the previous leading brand in the country.
With illegal brands such as RG, selling at R10 a packet or less while evading tax, and legal brands such as Peter Stuyvesant paying the minimum tax on cigarettes, of R17,85, while selling their product at around R36 to R40 a packet, it is understandable that major brands are lagging behind. Van der Merwe voiced his concern over the legal trade collapsing due to the continued sale of illegal tobacco.
As a tobacco farmer himself, Van der Merwe knows all too well how the illegal trade of tobacco is causing the legal industry to collapse. He said that more than 12 000 jobs are directly threatened by this illegal trade. This also applies to small-holder farmers who feel the decline in demand for local tobacco the most.
Below is an infographic that summarises how the second round of market research by Ipsos has revealed an increase in illegal activity in the tobacco industry. – Ursula Human, AgriOrbit