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Tag: South Africa

  • Illicit Cigarettes Dominate South Africa’s Tobacco Market

    Illicit Cigarettes Dominate South Africa’s Tobacco Market

    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.

  • S. Africa Trying to Flip ‘Inadequate’ Illicit Tobacco Response

    S. Africa Trying to Flip ‘Inadequate’ Illicit Tobacco Response

    South Africa’s response to illicit tobacco remains inadequate, with legislative gaps, weak enforcement, and entrenched criminal networks that have been flourishing since the Covid-19 cigarette ban, Stefano Betti of the Transnational Alliance to Combat Illicit Trade said at the EMEA Security Conference in Cape Town. He said illicit cigarettes may now account for between 50% and 75% of the market, driven largely by local under-declaration of production to evade taxes, creating severe price distortions between legal and illegal products and fueling money laundering risks.

    While acknowledging progress such as the creation of the Border Management Authority, efforts by the National Prosecuting Authority, and South Africa’s exit from the Financial Action Task Force grey list, Betti stressed that political commitments must translate into operational results. Echoing the call for stronger action, Kobus Lategan of the South African Police Service said authorities are preparing a large, intelligence-led national operation under direction from Cyril Ramaphosa to target illicit trade and counterfeit goods through coordinated enforcement across agencies and with private-sector support.

  • S. Africa Exempts Smokeless Tobacco from New Regs

    S. Africa Exempts Smokeless Tobacco from New Regs

    South Africa’s Department of Health plans to exempt non-combustible and smokeless tobacco products such as snus, chewing tobacco, nicotine pouches, and e-cigarettes from key provisions of the Tobacco Products and Electronic Delivery Systems Control Bill, according to Times Live. Deputy Director-General Jeanette Hunter said the exemption reflects their lower toxic profile, though rules will still restrict misleading claims, shapes, and descriptors to protect children.

    Parliamentary debate raised cultural and enforcement concerns, with the African Transformation Movement’s Vuyo Zungula calling for clear exemptions for traditional snuff use, and Freedom Front Plus’ Philippus van Staden citing limited law enforcement and border controls. Health Minister Aaron Motsoaledi clarified that cultural use of combustible tobacco is rare, while Hunter highlighted that smoking remains prohibited in public spaces, with compliance largely enforced by public awareness rather than police presence.

  • Article: Ripple Effect of Restrictive Tobacco Regulations in S. Africa

    Article: Ripple Effect of Restrictive Tobacco Regulations in S. Africa

    South Africa’s 2020 tobacco ban, intended to reduce smoking-related health risks during the COVID-19 pandemic, drove legal sales underground and opened the door for illicit products that today account for as much as 75% of the market, according to law graduate Mukundi Budeli, writing for the Rational Standard and republished by the Free Market Foundation. Budeli said the shift cost the government tens of billions in lost tax revenue, fueled organized crime, and exposed consumers to unregulated and potentially more harmful products.

    He also said the policy hastened the departure of British American Tobacco, which announced the closure of its Heidelberg plant by the end of 2026, which will directly affect 230 employees and is expected to ripple across the broader tobacco value chain, impacting up to 35,000 jobs. Budeli argues that the crisis illustrates the unintended consequences of overly restrictive regulation and calls for a re-evaluation of South Africa’s approach to tobacco policy. He suggests that future governance should strike a balance between public health objectives, economic stability, and individual freedoms to prevent similar market distortions.

    The Free Market Foundation emphasizes that the situation serves as a warning to policymakers about the dangers of regulatory overreach and the need for pragmatic, accountable, and market-aware legislation in the tobacco sector.

  • Vape Industry Unconvinced by S. Africa’s Tobacco Bill Changes

    Vape Industry Unconvinced by S. Africa’s Tobacco Bill Changes

    The Vapor Products Association of South Africa reiterated concerns over the Tobacco Products and Electronic Delivery System Control Bill, arguing that it fails to recognize vaping products as a harm-reduction tool and does not differentiate adequately between cigarette and vape users. While the Department of Health of South Africa has indicated willingness to ease packaging rules, including graphic health warnings, for non-combustible products, VPASA warns that similar punishments could still apply to both combustible and non-combustible users, potentially discouraging smokers from switching to less harmful alternatives.

    The bill, first introduced in 2022, regulates the use, marketing, advertising, and trade of tobacco and electronic delivery systems, including e-cigarettes and vaping pods. Public hearings between 2023 and 2025 saw participation from 7,900 individuals with 1,113 oral submissions, showing mixed opinions: 44.9% in support, 44.5% opposed, 1.3% partially supportive, and 9.3% undeclared. The portfolio committee is yet to vote on the bill’s desirability, while discussions continue over how to implement clear differentiation between combustible and non-combustible products to ensure vaping is recognized as a distinct, lower-risk category.

  • Concerns Loom Over S. Africa Tobacco Control Bill

    Concerns Loom Over S. Africa Tobacco Control Bill

    South Africa’s tobacco policy debate sharpened this week after Finance Minister Enoch Godongwana used his Budget speech to warn that illicit trade is inflicting serious damage on the economy, while hours later the Department of Health faced pointed pushback in Parliament over whether its Tobacco Products and Electronic Delivery Systems Control Bill adequately addresses that crisis. Appearing before the Portfolio Committee on Health, officials defended the Bill’s public health rationale, arguing it does not ban cigarettes and that smoking imposes greater economic costs than it generates. However, MPs from multiple parties pressed the Department on estimates that as much as 70% of the cigarette market may be illicit, questioning whether the proposed measures meaningfully target the dominant illegal segment.

    Lawmakers repeatedly raised concerns about enforcement capacity, proportionality, and the risk that additional regulatory burdens — such as plain packaging and stricter penalties — could further advantage criminal syndicates if illicit trade remains unchecked. The Department leaned on international precedent and South Africa’s obligations under the WHO Framework Convention on Tobacco Control, while some MPs called for greater differentiation between combustible and non-combustible products and more realistic alignment with local enforcement realities.

  • BAT Closure Leading S. Africa to ‘Warehouse Economy’

    BAT Closure Leading S. Africa to ‘Warehouse Economy’

    The South African Federation of Trade Unions (SAFTU) warned that South Africa is sliding toward a “warehouse economy” following British American Tobacco’s decision to shut its Heidelberg manufacturing plant and shift to imports. SAFTU General Secretary Zwelinzima Vavi said the closure would cost around 200 direct jobs and thousands more indirectly, arguing it reflects a broader pattern of deindustrialization as multinational companies scale back local production.

    SAFTU urged Parliament to halt the Tobacco Control Bill in its current form, warning it could further weaken legal tobacco manufacturers while strengthening illicit trade, which Vavi said already accounts for roughly 75% of cigarette sales. BAT cited rampant illegal cigarettes as a key factor behind the closure, noting that illicit trade has weighed on its South African operations and financial performance. SAFTU is calling for a full socioeconomic impact assessment of the bill, while BAT has pushed for stronger enforcement and a minimum retail price to curb illegal sales.

  • South Africa’s Tobacco and Vaping Bill Still Likely a Year Away

    South Africa’s Tobacco and Vaping Bill Still Likely a Year Away

    South Africa’s Tobacco Products and Electronic Delivery Systems Control Bill is unlikely to become law for at least another year, with further delays expected for implementing regulations, according to Professor Lekan Ayo-Yusuf of the University of Pretoria. The bill, first drafted in 2018 and reintroduced in 2022, has faced prolonged parliamentary delays that he attributes to disinformation, political distraction, and a lack of urgency.

    Ayo-Yusuf warned that the slow pace benefits the tobacco and vaping industry by leaving a regulatory vacuum as vaping and other nicotine alternatives gain popularity among young people. While acknowledging the need to address illicit cigarette trade, Ayo-Yusuf stressed that tobacco regulation is fundamentally a public health issue, not a trade-off between health and the economy. The bill has recently gained vocal support from the uMkhonto weSizwe (MK) Party, which described it as pro-poor and pro-development, arguing that strong tobacco control reduces healthcare burdens and protects public welfare, while illicit trade should be tackled through enforcement rather than weakened health laws.

  • Barnes Named First Female GM of PMSA

    Barnes Named First Female GM of PMSA

    Philip Morris International appointed Buena Barnes as general manager of Philip Morris South Africa (PMSA), replacing Branislav Bibic, who is now the area vice president for Sub-Saharan Africa. Barnes, who is the first woman to hold the position, previously served as finance director for Sub-Saharan Africa and brings more than four years of local leadership experience as PMI continues its shift toward smoke-free products.

    Barnes played a key role in PMI’s transformation strategy, which has seen smoke-free products account for 41% of the company’s net revenues by Q3 2025, with PMI targeting more than 50% by year-end. Her background includes senior finance and strategy roles at GlaxoSmithKline South Africa and British American Tobacco South Africa. She has been a vocal supporter of PMI’s science-led alternatives, including IQOS, introduced in South Africa in 2017, followed by ZYN nicotine pouches in 2023 and VEEV e-vapor in 2025.

  • BAT to Shut Down Only South African Plant

    BAT to Shut Down Only South African Plant

    BAT South Africa (BATSA) announced it will cease local production of factory-manufactured cigarettes and close its sole manufacturing facility in Heidelberg, Gauteng, by the end of 2026, citing the overwhelming growth of illicit cigarettes in the market. The company estimates that illegal products now account for about 75% of cigarette sales in South Africa, rendering local manufacturing commercially unviable. The plant is currently operating at just 35% of capacity due to sustained volume losses linked to the illicit trade.

    “We have tried everything to ensure we don’t have to close this facility, which has been a part of the Heidelberg community since 1975, including implementing various efficiency initiatives over the years,” said Johnny Moloto, head of corporate and regulatory affairs at BAT Sub-Saharan Africa.  “But when three-quarters of your market is illicit, there’s a limit to what any company can do. We’ve reached that limit.”

    BATSA said the closure will directly affect approximately 230 employees and their families and will also have knock-on effects across the local value chain, including suppliers, logistics providers, and contractors in the Lesedi community. The company has initiated a formal consultation process with employees and unions in line with labor law and expects this process to conclude by the end of March 2026, ahead of the full shutdown later in the year. Despite the closure, BATSA stressed it is not exiting South Africa and will transition to an import-based supply model to continue serving adult consumers.

    The company said it has spent more than a decade engaging with government and law-enforcement authorities, warning that policy decisions such as the 2020 tobacco sales ban, above-inflation excise increases, and proposed new tobacco legislation have widened the gap between legal and illegal products. BATSA argued that enforcement efforts have been insufficient to protect legitimate businesses and jobs, with illicit cigarettes costing an estimated R28 billion ($1.7 billion) a year in lost tax revenue. BATSA also warned that illicit trade is increasingly affecting other sectors, including alcohol, pharmaceuticals, and consumer goods.

    The growth of illicit trade accelerated after a Covid-era ban on tobacco sales in 2020, from which BATSA says the legal market never recovered. BATSA said it could reconsider local manufacturing if there is sustained progress in curbing illicit trade but cautioned that proposed new tobacco legislation and rising excise duties risk further worsening the problem.