UCT Survey Shows Cigarette Prices Have Risen By 250% During Lockdown

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According to a research report by the Research Unit on the Economics of Excisable Products (REEP) at the University of Cape Town (UCT), the average price of cigarettes increased by 250% during the national lockdown.

Price Increases and Popular Brands

The average price of cigarettes has increased by 250% from its pre-lockdown price and is significantly higher than the 90% increase reported during May.

The price increase per province is as follows:

  • Western Cape: 379%
  • Northern Cape: 367%
  • Eastern Cape: 281%
  • Limpopo: 123%
  • Mpumalanga: 141%
  • Gauteng: 152%

Findings on brand popularity:

  • The amount of cigarettes bought from multinational tobacco companies has decreased from 77% before the lockdown to 18% during the time of the survey
  • The survey found that the ten most common brands bought before the lockdown was not of the ten highest brands bought during the lockdown
  • The tobacco companies where most of the cigarettes were bought from include Gold Leaf Tobacco Corporation with 26%, Carnilinx with 14%, Best Tobacco Company with 11%, Amalgamated Tobacco Company with 10% and British American Tobacco with 9%

REEP says it is ironic that the Fair-Trade Independent Tobacco Association (FITA) has started a court case to lift the sales ban because many of their members have greatly benefited from it and could claim large profits that will give them leverage to reject future reforms.

The REEP report reads that, “Being able to produce cigarettes legally for the export market (as has been the case since the
country moved to lockdown level 4), but not able to sell cigarettes in South Africa, has created a loophole and an incentive to sell illegally in the very lucrative local market. Manufacturers will
find it difficult to resist this temptation, especially because so many companies are selling
cigarettes, despite the sales ban. Given the tobacco industry’s long record of involvement in illicit trade, it is likely that they will divert cigarettes, ostensibly destined for the export market, to the local market,”.

REEP further predicts that once the ban on the sale of tobacco products is lifted there will be a price war where multinational companies (MNCs), who have been losing profits, will try to get their market share back and non-MNCs will try to hold onto their market share. REEP says that the decrease in prices may lead to more problems for the health sector.

REEP suggests that the government could have taken an alternative approach by imposing a high immediate increase in excise taxes from R17.40 per pack of 20 cigarettes to at least R50 per pack. Such an increase would also help the National Treasury and the South African Revenue Services to generate revenue during the lockdown.

Further data from respondents who continued to smoke during the lockdown:

  • 27% sourced cigarettes through friends and family, 25% through spaza shops, 11% through street vendors and 8% through WhatsApp groups
  • Their average amount of cigarettes smoked per day decreased to 13.1 cigarettes/day from 16.4 cigarettes/day before the lockdown
  • 50% of respondents smoked fewer cigarettes during the lockdown, 35% the same and 15% more
  • Respondents who share their individual cigarettes has increased by 430% from 1.7% before lockdown to 8.9% during the lockdown

REEP says that the government should lift the ban soon, impose higher excise taxes and have better tax enforcement measures in place. The research unit says that most smokers did not stop smoking because of health reasons, but because the illicit market made it difficult to afford the exorbitant prices.

The research was conducted by Professor Corné van Walbeek, Samantha Filby and Kirsten van der Zee. A questionnaire was shared to various online platforms including Twitter, Change.org and Moya and used 23 631 responses to conclude results.