Illicit cigarettes account for around 60% of South Africa’s market, according to new research from the University of Cape Town, highlighting a sharp rise from about 30% prior to the COVID-19 pandemic. The study found the surge represents a structural shift in the industry, with major players losing share while local producers linked to low-priced products have expanded significantly, selling cigarettes at levels suggesting taxes are not being paid.
The findings also show illicit products are concentrated in informal retail channels and are disproportionately consumed by lower-income, heavy smokers, driven by cheaper pricing. Researchers say the scale of the illicit trade is undermining tax revenues and reshaping market dynamics, with calls for stronger supply chain controls and enforcement measures to address the issue.