Almost half of SA tobacco sales illegal – BAT

The tobacco industry continues to face a rising number of challenges, including rising levels of trafficking and an increasingly uncertain regulatory environment, says a Business Day report. British American Tobacco (BAT) estimates that 47% of the tobacco market in SA is controlled by illicit players, making it one of the largest in the world and costing the fiscus up to R9bn a year in uncollected tax as production volumes are concealed from the authorities. Tobacco ‘yields are improving, but we face an even greater threat in the form of the illicit trade, which robs the legal industry of income and puts all the jobs and livelihoods in the tobacco value chain at risk’, said Rudolf Otterman, chair of Limpopo Tobacco Processors. Globally, the illegal tobacco industry accounts for about 6% to 12% of consumption. Illegal products are said to be far cheaper than legal cigarettes, taxed at a minimum of R16.30 per packet of 20, which illicit producers do not pay. This, according to the tobacco industry players, means legal producers not only lose out to unlicensed competitors but have to compete for market share with unfairly priced products.