SA smokers hankering for a puff during lockdown have been paying through the nose for their habit, with prices soaring by an average of 250%, TimesLive reported.
This pegs one box of 20 cigarettes at as much as R114, with black market prices rising significantly with the extension of the tobacco ban during level 3 of the national lockdown.
The study, conducted by the University of Cape Town’s research unit on the economics of excisable products, found that Capetonian smokers were hardest hit.
There are substantial differences in the price increase between the provinces.
The study found that before the lockdown, nearly 80% of smokers surveyed enjoyed cigarette brands produced by multinational companies like British American Tobacco, Philip Morris International, Japan Tobacco International and Imperial Tobacco.
“By early May this percentage had decreased to 38% and by early June 2020 to 18%,” the report found.
Local tobacco producers had stolen significant market share during the lockdown, with Gold Leaf Tobacco and controversial Carnilinx making up 26% and 14% of the preferred brands while cigarettes have been outlawed.
“None of the top 10 cigarette brands that were most purchased by our survey respondents, pre-lockdown are in the top 10 list of cigarette brands purchased during the lockdown.”
Researchers noted that the Fair-Trade Independent Tobacco Association’s (Fita) court case to have the sales ban lifted was “ironic”.
“This because their members have benefited disproportionately from the sales ban. They have greatly increased their share of the market within our sample and sold their cigarettes at hugely inflated prices.
“The extraordinary profits likely earned during the lockdown 4 period will allow them to oppose tobacco control reforms more effectively in future. For example, they could engage in legal battles with the government over the Control of Tobacco Products and Electronic Delivery Systems Bill or Track and Trace systems,” the study found.
“Being able to produce cigarettes legally for the export market, but not able to sell cigarettes in SA, 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.
“The multinationals have been the biggest losers during the lockdown period,” the report reads.
Most of those who had quit smoking during the lockdown did so because of price gauging, and not because of concerns over their health.
“We predict that, once the sales ban is lifted, there will be a price war, in which the multinationals will aim to get some of their market share back and the non-multinational companies will aim to hold on to their markets.”
This could see cigarette prices plummet, a move which would be detrimental to public health.
“Instead of imposing a sales ban to prevent people from smoking cigarettes, the government would have been able to achieve a similar outcome by substantially increasing the excise tax. Most smokers that have quit smoking during lockdown did not quit because of health concerns or because they wanted to follow the government’s regulations, but because the illegal market that was created by the lockdown made cigarettes unaffordable.”