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- A new survey by a UCT research unit shows a big change in the market share of cigarette brands after the 20-week tobacco sale ban.
- Aside from Winston, most of the big international brands gave up market share to smaller brands, the survey showed.
- All cigarettes are now more expensive than before the ban.
- For more articles, go to www.BusinessInsider.co.za.
The tobacco ban may have brought about a permanent change in the South African cigarette market, a new study shows.
After its third survey of nearly 4,000 smokers this year, the Research Unit on the Economics of Existing Products (REEP) at the University of Cape Town released its new findings this week.
The sale of tobacco was prohibited for 20 weeks during the first phase of closure. Only Botswana (12 weeks) and India (6 weeks) banned tobacco sales in reaction to the pandemic.
Professor Corné van Walbeek, Kirsten van der Zee and Samantha Filby from the unit found that before the tobacco ban, almost 74% of the cigarettes smoked by respondents were produced by multinational companies (British American Tobacco, Japan Tobacco International and Philip Morris International). In June, its share fell to 17%, but by September it had risen to 66%.
Source: Research Unit on the Economics of Taxed Products (REEP) of the University of Cape Town
During the tobacco ban, sales of smaller African brands like Zimbabwe’s Gold Leaf Tobacco, which sells RG and Chicago cigarettes, skyrocketed. Gold Leaf faces accusations that it is part of the illegal cigarette trade and that it is evading taxes in South Africa.
Gold Leaf’s RG became the best-selling brand during the closing. While its market share has fallen since the ban was lifted, it is still larger than BAT’s Dunhill, Rothmans and Kent brands, as well as Philip Morris’s Chesterfield, which were all more popular in the pre-ban period. .
Of the international brands, only Winston had a larger market share after the ban was lifted than in March 2020. Dunhill, Chesterfield, Rothmans, Peter Stuyvesant and Camel all gave up their market share.
Source: Research Unit on the Economics of Taxed Products (REEP), University of Cape Town
REEP found that cigarette prices have risen significantly this year. British American Tobacco announced price increases of between 4% and 10% one week after the ban was lifted. The reported average price of MNC brands was almost 5% higher in September 2020 than before closing, while non-MNC brands were now 30% more expensive.
“It appears that the various tobacco companies felt that smokers had gotten used to the high prices during the sales ban and that they could improve their profitability by increasing the price, compared to the pre-ban period, after the ban. gotten up. The very substantial increase in the retail price of the brands that are not multinationals means that they are converging towards the prices of the multinationals, ”the report concluded.
“We recommend that the National Treasury increase the consumption tax as soon as possible. This will reduce cigarette smoking and increase government revenue, ”the authors recommend.
Of the participants, only 9% have successfully quit smoking and have not relapsed, in response to the ban.
About 22% of those surveyed indicated that they smoked more cigarettes after prohibition, 38% smoked fewer cigarettes, and 40% smoked the same number of cigarettes as before prohibition.
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