Illicit trade in cigarettes undermines the public health and fiscal objectives of tobacco taxation. In South Africa, the problem has intensified since 2015, particularly following the 2020 tobacco sales ban. The ban significantly disrupted market dynamics and allowed the illicit cigarette trade to increase to about 60% of the total market.
We estimate the size of South Africa’s illicit market in 2021, and identify specific brands and their producers involved in illicit trade, and examine the characteristics of consumers who are most likely to purchase illicit cigarettes.
The Global Adult Tobacco Survey, a nationally representative survey of adults aged 15 and older, was conducted in South Africa in 2021. Likely illicit cigarettes are identified using a price threshold approach. Self-reported brands are allocated to tobacco producers, based on publicly available market data. Logistic regression is used to analyse the consumer characteristics associated with illicit cigarette use.
Nearly 60% of cigarettes in the market were classified as likely illicit. Certain brands were strongly associated with illicit trade, selling almost exclusively at below-threshold prices. The producers of these brands were almost all local/regionally-based. Illicit cigarettes were typically distributed via informal channels. Illicit cigarette use was highest among people with lower incomes, less education and high daily cigarette consumption.
The illicit cigarette trade in South Africa is rampant and driven mostly by non-multinational brands and informal retail channels. It threatens public health and causes significant tax revenue losses. The insights from this study can inform enforcement strategies.