in

Study Shows Disarray In Cigarette Market, Prices Spike As More People Share Smokes

The ongoing cigarette ban has resulted in prices continuing to spike on the black market, while any benefits of the ban were mostly achieved under lockdown alert level 5, according to a recent study.

Moreover, the study found, brands associated with the Fair Trade Tobacco Association – which went to court to have the tobacco overturned – are proving big sellers under the ban.

Research conducted by the Research Unit on the Economics of Excisable Products (REEP), an independent research unit based at the University of Cape Town, found that the average price of cigarettes has increased by nearly 250% compared to pre-lockdown levels.

This is based on a second online survey of some 23 000 respondents the team conducted between 4 and 19 June 2020, where they found that the average price per cigarette was R5.69 or R114 per pack of 20.

This is compared to a 90% increase in cigarette prices noted in an earlier survey in May by the same team.

The second wave of the study also found that despite the rising prices, a smaller percentage of respondents were trying to quit. The latest research found that nearly 30% of respondents had tried to quit during the lockdown, citing the high cost of cigarettes, while another 14% said they had tried to quit due to the sales ban.

Previously, the team found 41% of respondents had tried to quit, with 12% saying they planned to start smoking again once the ban was over.

More than 70% of smokers who quit did so before 2 May 2020.

Professor Corné van Walbeek, director of REEP, described the percentage of successful quitters as “little more than a trickle”, saying:

“The intended lockdown benefit of people quitting smoking was mostly realised in Lockdown level 5. The percentage of respondents who quit subsequently has decreased to little more than a trickle.”

The study also found that there were large demographic disparities among those who said they had quit successfully.

“Nearly half of African females and more than a third of African males who answered the survey indicated that they had successfully quit smoking.

“At the other extreme, fewer than 4% of white male and fewer than 2% of white female respondents indicated that they had successfully quit smoking during the lockdown,” the researchers said in a statement on Wednesday.

Cigarette market ‘in disarray’

Since the first survey, the percentage of respondents who had managed to buy cigarettes also increased. The team’s earlier results found that 90% of continuing smokers had been able to purchase cigarettes, while the second survey found that 93% had been able to continue buying cigarettes.

Most respondents had purchased cigarettes through informal channels, such as friends and family (27%), spaza shops (25%), street vendors (11%) and WhatsApp groups (8%). Formal retail outlets, which were the predominant source of cigarettes before lockdown (53%), have all but disappeared (0.3%), the researchers said.

Van Walbeek added that the tobacco market had “completely changed” since the sales ban.

“The tobacco sales ban during the lockdown has thrown the cigarette market into disarray. The market has completely changed.”

He said:

“Whereas previously multinationals dominated the market, their share of sales has decreased to less than 20% among the people who were sampled. Most of our respondents have been forced to switch brands, a large proportion of which are produced by local manufacturers.”
‘Ironic’

The researchers further found that more than half of all the cigarettes most recently purchased by respondents were brands from three companies affiliated with the Fair-Trade Independent Tobacco Association (FITA): Gold Leaf Tobacco Corporation (26%), Carnilinx (14%) and Best Tobacco Company (11%).

But British American Tobacco, which was the industry’s major player for decades, fell to fifth place, with its brands having been purchased by only 9% of survey respondents who continue to smoke.

FITA has made headlines for going to court in a bid to get the sales ban overturned. Its application was dismissed with costs. The state had accused the organisation of wanting to overturn the ban out of financial interest.

Van Walbeek said this was “ironic”.

“The fact that FITA, which primarily represents the local manufacturers, went to court to get the sales ban overturned is peculiar and ironic because our results show that FITA members have benefitted disproportionately from of the sales ban.

“They have greatly increased their market share within the sample and have likely been making extraordinary profits, given their highly inflated prices.”

The study did find that smokers who continued to smoke were smoking a little less. The average number of daily cigarettes smoked decreased from 16.4 cigarettes pre-lockdown to 13.1 cigarettes in June 2020.

Half of these respondents smoked less during lockdown than before lockdown, 15% smoked more, and 35% smoked the same amount, the researchers said.

But – in an apparent contradiction to Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma’s concern that lifting the smoking ban might encourage people to “zol – the study found that more people were sharing cigarettes under the ban.

While 82% of respondents said that before lockdown they had never shared an individual cigarette, during lockdown this percentage dropped to 74%.

The researchers added:

” The number of people who indicated that they regularly shared individual cigarette sticks (more than 50% of cigarettes smoked were shared) increased from 1.7% to 8.9%, an increase of 430%.”
The authors argue that the continued ban is “misguided” and recommend it be lifted immediately, adding that it has stimulated an “already large” illicit market.

” Illegal distribution channels have become more entrenched, which will have lasting public health and economic consequences,” they state.

In addition to the risk of continued revenue loss, they argue that the tobacco market has been profoundly destabilised and “[i]t seems likely that there will be a price war after the sales ban is lifted”.

A better approach, they say, would have been to increase the existing excise tax, which could encourage smokers to quit or reduce consumption.

“The result would be similar to that of a sales ban, but the revenue would continue to flow to government and less would end up in the hands of the tobacco industry.”

“The one lesson that we learn from the sales ban and the associated chaos in the market is that smokers are willing to pay a much higher price than the R25 to R45 per pack that they were paying before the lockdown. National Treasury should substantially increase the excise tax on tobacco products when the sales ban is lifted. Such a strategy will have good public health consequences and will allow the government to claw back the loss of revenue that it suffered during the lockdown,” Van Walbeek said.

Loading...

Written by Ph

[g1_socials_user user="6" icon_size="28" icon_color="text"]

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Covid-19: Bio-Hazard Warning As Truck Carrying Samples Hijacked In Port Elizabeth

AKA Claps Back At Trolls Saying He Is Getting Broke