Industry Accused of Profiting from Ban

Tobacco companies have profited handsomely from South Africa’s ban on tobacco sales imposed by the government in response to the Covid-19 pandemic, according to a prominent academic.

“The behavior of the tobacco industry during the lockdown has been nothing short of disgraceful … the fact is that tobacco companies have been actively selling in the illicit market,” said Corne van Walbeek, director of the Research Unit on the Economics of Excisable Products at the University of Cape Town.
 
He said 90 percent of cigarettes sold since March 27, when the ban took effect, were of brands produced locally, giving the lie to the claim by industry groups that the black market was flooded with counterfeit products.
 
The government in May allowed cigarette companies to resume export production, and trade experts have said this gave them cover to circumvent the sales ban by exporting excess volumes that were then smuggled into the South African black market.
 
Van Walbeek said the Fair-Trade Independent Tobacco Association (Fita), the first tobacco group to challenge the ban in court, had increased its market share to around 60 percent during the 140-day-old ban.
 
“The fact that Fita instituted the court case is especially ironic in that their members have been the main beneficiaries of the sales ban,” said Van Walbeek. “Fita members have greatly increased their market share and have increased the price of their product by nearly 500 percent on average.”