A pack of smokes should cost at least R28 to fight illicit trade, says BATSA

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BATSA wants government and SARS to do more to fight illicit tobacco trade.
BATSA wants government and SARS to do more to fight illicit tobacco trade.
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  • Ipsos' survey shows that about 41% of sampled retailers sell cigarettes at and below R21.60 per pack of 20.
  • British American Tobacco SA has called for an inquiry into the whole industry and wants cigarettes to retail at R28 at a minimum to fight illicit trade.
  • Between April and June, SARS managed to seize R77 million in illegal cigarettes.

British American Tobacco SA (BATSA) wants a pack of cigarettes to retail at a minimum of R28 as part of efforts to fight illicit trade.

The cigarette manufacturer on Wednesday issued a statement raising concerns on the findings of an Ipsos survey which showed that packs of 20 cigarettes were retailing for less than the minimum collectible tax amount (which includes excise duties and VAT) of R21.60.

The research was commissioned by BATSA and independently conducted by Ipsos in June. This is the third wave of data released by the market research company. The sample for the third wave was smaller at 4 248 compared to the first wave at 4 430.

The data showed that 1 751 or 41% of retailers were selling cigarettes at and below R21.60. This is slightly lower than the 44% recorded in the first wave.

As for a carton of ten packets of cigarettes, the lowest price point detected was an outlier of R60. This translates to R6 per packet. The "most frequently mentioned" lowest price for a carton was R210.

"In three of the nine provinces in South Africa, purchases at R21.60 and below, occurred at more than 50% of the retail stores sampled," the report read. The three provinces are the Free State, the Western Cape and Gauteng. 

Data for the Eastern Cape showed a spike in incidences of sales for cigarettes at or below R21.60, from 20% to 42%. KwaZulu-Natal's data also lifted from 32% to 44%.

Low pricing was detected across different channels such as informal trade, wholesale, general trade and forecourts at petrol stations.

According to the report, manufacturer Gold Lead Tobacco Corporation's brands were among those detected to be the cheapest products on offer.

"There was a general increase in the number of sample stores that stock non-South African brands from neighbouring countries, when compared with the previous study, pointing to an influx of foreign brands into the market," the report read.

The report shows an increase in incidences of cigarettes at and below R21.60 by manufacturers such as Gold Leaf Tobacco Corporation South Africa, Carnilinx, Protobac, Mastermind Tobacco, Global Tobacco and Amalgamated Tobacco, among others.

'Damning' research 

BATSA's brand Pall Mall had a 1% incidence of being sold at and below R25. It has 0% incidence of pricing at or below R21.60 per pack.

"This research is damning proof that authorities have failed to bring South Africa's colossal criminal market in cigarettes under control," said BATSA general manager Johnny Moloto. Moloto called for a "full-scale" inquiry into the whole industry.

Apart from selling cigarettes at a minimum of R28 for a pack of 20, BATSA also wants government and the South African Revenue Service (SARS) to ratify the World Health Organisation Illicit Trade protocol to fight illicit trade and to introduce a track-and-trace system for cigarettes.

However, SARS Commissioner Edward Kieswetter told Fin24 in an interview that between April and June, the revenue service managed to seize R77 million in illegal cigarettes, up from R50 million last year.

In June, SARS also began the process of destroying cigarettes seized from previous busts. SARS has earmarked R120 million to modernise its customs, according to Kieswetter. 

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