Economists behind an extensive survey of smokers say the lockdown ban on cigarette sales has been a spectacular failure and should be lifted as soon as possible.
More than 90% of the 12,000-plus smokers who completed an online questionnaire said they had bought cigarettes in spite of the ban.
On top of its failure to stop people smoking, the ban had strengthened illicit distribution networks that would now be difficult to dismantle, the economists said.
In a report entitled Lighting up the illicit market, members of the University of Cape Town’s (UCT’s) research unit on the economics of excisable products said the ban had:
- Caused nearly half of smokers to switch from multinational brands to local brands;
- Caused “hyperinflation” in which cigarette prices “skyrocketed” by 4.4% a day;
- Made a post-lockdown price war inevitable, which would “ultimately lead to increased cigarette consumption in SA”;
- Undone the progress the South African Revenue Service had made in stamping out illegal cigarettes and given illicit traders a foothold “where they previously could not compete on a quality basis”;
- Created a boom in the informal retail sector, with two-thirds of smokers now buying cigarettes from spaza shops and the like instead of from formal retailers;
- Made street vendors a key source of cigarettes for 26% of smokers; and
- Created a thriving black market that revolved around friends and family, WhatsApp groups and “essential worker” acquaintances.
As well as plunging the market into “turmoil”, research unit head professor Corné van Walbeek said the ban had unleashed a tidal wave of anger and mental anguish.
“Respondents do not understand the economic or health rationale for the sales ban,” said Van Walbeek and his colleagues Samantha Filby and Kirsten van der Zee.
“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 them mental health problems because they were unable to smoke.
“Many indicated increased anxiety, feelings of depression, being less focused, and . physical withdrawal symptoms.”
One smoker told the researchers: “The continuation of the ban is illogical. Everyone is still smoking, just doing it illegally and at great cost while the government loses tax income and criminals make a fortune.”
An earlier survey, conducted by the Human Sciences Research Council in the third week of lockdown between April 9 and 16, found that only 12% of smokers had bought cigarettes in defiance of the ban.
The UCT team collected responses between April 29 and May 11 and said this probably accounted for the different result.
“Our results indicate that 90% of smokers had stocked up on cigarettes before the start of the lockdown,” said Van Walbeek.
“The initial expectation was that the ban on the sales of cigarettes would last for three weeks, so presumably most smokers would have enough stock to last them through that period.”
Cigarette consumption increased from an average of 10 a day to 11 in the first two weeks of lockdown, then went down to nine. “This suggests that most people did not stock up sufficiently for the [lockdown] extension and were forced to ration the remainder of their cigarettes,” said Van Walbeek.
Two smokers in five had tried to quit but most had failed and they were now paying almost 90% more for their habit. “Smokers are desperate and are willing to pay exorbitant prices,” said Van Walbeek.
Price increases varied substantially around the country but local brands went up the most at the same time as they leapt to the top of the sales charts.
“Half of the brands that are in the top 10 during the lockdown did not feature at all for the pre-lockdown period. These brands [Sharp, Caesar, JFK, Remington Gold and Savannah] are all produced by local companies.”
The biggest beneficiary is Gold Leaf Tobacco, part-owned by Simon Rudland, who survived an attempted hit as he arrived in his Porsche for a meeting at the Fair Trade Independent Tobacco Association offices in Johannesburg in August last year.
Gold Leaf’s market share has increased from 12% to 30%, Carnilinx’s from 2% to 10% and Best Tobacco Co’s from 2% to 9%.
International cigarette giant British American Tobacco has seen its market share plunge almost two-thirds, to 24%.
Van Walbeek and his team said: “It was an error to continue with [the ban] into level 4 lockdown. The government should lift [it] as soon as possible.”