DAVID CHRISTIANSON: From bad to worse
Data suggests half of SA’s cigarette market is now illegal, while trade in illicit alcohol is larger than the wine and cider subsectors combined
When SA banned trade in cigarettes and alcohol last year in response to the Covid-19 epidemic critics warned that this would serve largely to drive these industries underground. Drawing on more than a century of experience going back to the 1919 Volsted Act, which introduced prohibition to the US, these commentators suggested the main beneficiaries would be criminal networks.
In mid-2021 it is becoming apparent that these fears were well founded. It seems the illicit trade has become more deeply entrenched and thus more difficult to root out. Illicit cigarettes are by definition not taxed and thus sell for about half the price of the legal alternative. In its 2021 results presentation retail group Spar said cigarette sales at its SA franchise outlets were down 13.1% in the six months to March 2021 compared to the same period before the ban. The loss of market share to criminal operators has robbed the grocery retailer of nearly R500m. ..
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