Tobacco companies are switching to survival mode amid stifling regulation and a growing illicit market. Still, research shows that more than 7.7-million South African adults consume 11.4 cigarettes a day. The local industry, which has estimated annual revenue of more than R22-billion, loses a further R8-billion in revenue to the illicit cigarette trade.
British American Tobacco owned the lion’s share of this market in 2011 with 86% of the legal local cigarette trade. It is also the world’s second-largest tobacco company and has a presence in more countries than any other.
But a big industry player such as British American Tobacco stands to gain or lose the most.
At present, 29% of cigarettes are illicit or do not comply with regulation in some way. That is seven billion illicit cigarettes of a total of 29-billion sold.
In 2011, 1.2-billion cigarettes were seized and the onslaught was largely because of product from Dubai and Zimbabwe.
Quality standards need to be subscribed to and there are costs associated with that.
Four cigarette companies, including British American Tobacco, have recently taken the Australian government to court to stop a law that requires that all cigarettes be sold in olive-green packs with health warnings, graphic photos and an absence of brand logos. Only company names in a small standard font will be allowed.
- BAT says cash-strapped smokers are opting to buy illegal cigarettes
- BAT raises cigarette prices
- British American Tobacco: Excellent increases in profit