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Study finds government’s ban on cigarette sales in 2020 has lasting effect

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Study finds government’s ban on cigarette sales in 2020 has lasting effect

03 May 2022 – 18: 29

A study has found the 20-week national ban on the sale of cigarettes in 2020 has greatly disrupted the market in SA. File photo.

A study has found the 20-week national ban on the sale of cigarettes in 2020 has greatly disrupted the market in SA. File photo.
Image: 123RF/GIN SANDERS

Had government substantially increased the excise tax rather than banned the sale of tobacco products in 2020, it would have achieved a similar public health outcome, received more revenue and presumably not further entrenched the illicit market. This is according to Kirsten van der Zee and Samantha Filby of the University of Cape Town’s research unit Economics of Excisable Products.

Their research found the 20-week national ban on the sale of cigarettes in 2020 during the Covid-19 lockdown has greatly disrupted the market in SA. The ban accidentally benefited those manufacturers that were involved in illegal activities. Even after the ban was lifted, these manufacturers increased their market share. This ban could have further enshrined SA’s illicit market. They stated that there were unintended consequences to a temporary ban of the sale cigarettes.

Our results show there are unintended consequences associated with a temporary ban on the sale of cigarettes

Reep paper in ‘Nicotine and Tobacco Research’

Their paper published in Nicotine & Tobacco Research on Monday confirmed that despite the sale of cigarettes being illegal, most smokers were able to access them, but at a hugely inflated price. The sales ban had a negative impact on the market’s brand composition, primarily because it was favored local businesses that were previously suspected of supporting the illegal market.” they stated.

Government imposed a ban on the sale of tobacco products as part of its Covid-19 lockdown response in March 2020. Fast five months later, the ban was lifted. The study found that most smokers continued to smoke during this period, and cigarettes were still being sold throughout the country despite the ban.

“Cigarette prices skyrocketed, with reported prices increasing by an average of 240%. Before March 2020, cigarettes sold for R33. 40 per pack of 20 , on average, but by June 2020, the average price of a pack had increased to R113. 80.”

The ban also upended SA’s previously well-established brand profile.

“Before the ban, more than three quarters of survey markets were dominated by brands made by multinational corporations like Philip Morris, British American Tobacco and Japan Tobacco International. However, by June of 2020 many consumers had shifted to brands made by local or regional producers, for example RG and Caesar. By this time, the local brands made up 75% of the market in the sample.”

The researchers found while most of these market effects were reversed after the ban was lifted, it did have lasting effects. A survey was conducted one month after the ban on sales. The researchers discovered that prices had increased 3.6% compared to before.

“The multinational companies reclaimed their position as market leaders, but with a substantially lower market share than before the start of the sales ban. Based on the surveys, the market share of the multinationals decreased from 77% before the sales ban to 64% after the ban was lifted.”

Before the lockdown, illicit cigarettes were estimated to comprise between 25% and 30% of the total cigarette market in SA.

“The widespread sale of cigarettes during the ban, the development of new supply chains and the lasting brand shake-up are likely to have further entrenched the already large illicit market.”

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