South Africa- Country Profile

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In July 2020, South Africa had an estimated population of approximately 59.62 million people. 1 Approximately 44,000 South Africans die from tobacco-related diseases annually.2

Tobacco Use

According to a 2017 national survey, about 20% of South Africa’s adult population (age 15+) smoked cigarettes,3 and a 2012 survey found that about 5% of the adult population used other tobacco products.4

In 1993, smoking prevalence among adults was estimated at approximately 33%.5 The decrease in smoking prevalence occurred between 1990 and 2010, after which it plateaued around the current level.

Who Dominates the Tobacco Market?

Historically, British American Tobacco South Africa (BATSA) maintained the lead as the largest tobacco manufacturer and distributor of tobacco products in South Africa. In recent years, their market share has declined.

Market research company Euromonitor International estimated that in 2019, BATSA held 71.4% of the market share, followed by Japan Tobacco International (JTI) (12%), and Philip Morris International (8.9%).6

Since 2010, local manufacturers (such as Gold Leaf Tobacco, Best Tobacco Company, Amalgamated Tobacco Manufacturers, and Carnilinx Tobacco Company) have entered the market offering lower priced brands. These companies have steadily gained market share and their presence increased dramatically during the COVID 19 pandemic when cigarette sales in South Africa were banned for five months.7

Next Generation Products

A 2016 national survey found that 2% of females and 3% of males aged 15−49 use e-cigarettes daily or occasionally.8 The most well-known e-cigarette brand in South Africa is Twisp. In August 2019, BATSA acquired Twisp from a South African e-cigarette manufacturer.9 Next generation products are heavily marketed so it is likely that the prevalence is now higher than 2%.

Legislation:

In February 2020, the finance minister announced that: “In line with department of health policy, we will start taxing heated tobacco products (HTPs), for example, hubbly-bubbly. The rate will be set at 75% of the rate of cigarettes. Electronic-cigarettes, or so-called vapes, will be taxed from 2021”.10 The Treasury defines HTPs as products that “produce aerosols containing addictive substances and other chemicals that are inhaled by users”. 11 Examples include IQOS by Philip Morris International and Glo by British American Tobacco (BAT). The Treasury has not provided a definition for e-cigarettes yet, but notes that: “electronic-cigarettes are different to HTPs: they do not contain tobacco, but they do contain nicotine or other chemicals”.12 While HTPs heat tobacco to generate nicotine, e-cigarettes heat e-liquid, which may or may not contain nicotine. For more information, see Heated Tobacco Products and E-cigarettes

Public health:

In an editorial published in 2020 by the South African Medical Journal, public health academics and advocates called on the South African government to take swift action to avoid the public health risks of e-cigarettes and speedily pass the Control of Tobacco Products and Electronic Delivery Systems Draft Bill into law.13 Although the government has committed to start taxing e-cigarettes in 2021, the government has been criticised for taxing them at 75% of the rate of cigarettes, which gives the impression that they are less harmful than cigarettes.12 For more information, see South Africa: Industry Interference with the Control of Tobacco Products and Electronic Delivery Systems Bill

Marketing:

Although tobacco companies are banned from advertising their products in South Africa, they exploit loopholes in the legislation to market their next generation products. Using social influencers, they promote their products on social media platforms. The tobacco industry heavily markets these products as “reduced harm”.14

To promote their next generation products, tobacco companies use social media networks and influencers. Journalists and influencers are provided with all-expenses paid trips to cover tobacco products at major events such as fashion weeks and art exhibitions, with the objective of promoting tobacco products.14

Tobacco Farming

Tobacco leaf is grown in several provinces of South Africa, but from 1990 to 2014 production decreased by 54%.15 Along with the decline in the area of tobacco planted, the number of primary producers and tobacco processors decreased. In 1996, there were 620 commercial tobacco farmers cultivating 14,700 hectares of land. This number decreased to 175 commercial tobacco producers in 2014, cultivating 4,700 hectares of land. Tobacco farming represents only a small fraction of agriculture in the country, with only less than 0.01% of agricultural land devoted to tobacco cultivation. 16

BATSA, Farmers and Corporate Social Responsibility

A 2016 BATSA report on the tobacco company’s “contribution to the South African economy”, stated that BATSA buys over 90% of the tobacco leaf grown in South Africa.17 The report further claimed that BATSA had invested over R280 million (roughly equivalent to £13 million in August 2020) in sustainable development programmes to support South African farmers and their communities.17 In May 2018, it was reported in the media that the Eastern Cape Development Corporation (ECDC), a government agency, and BATSA had signed a memorandum of understanding to collaborate on a project which would see BATSA fund skills training for emerging farmers and commit to buying their tobacco leaves.18 In July 2019, it was reported in the media that the collaboration was still ongoing.19 An impact study funded by the now-defunct Tobacco Institute of Southern Africa (TISA) of a similar private-public partnership initiated in 2011 with BATSA in another part of South Africa, concluded that the project had “changed the lives of participating farmers, their families and the wider community”.20

Yet, others are critical of these public-private partnerships, arguing that they are often used as part of a tobacco company’s Corporate Social Responsibility strategy, and that farmers remain poor because they earn so little from the low prices paid by tobacco companies for their leaves.212223

For more information, see CSR Strategy, (International Labour Organization) and United Nations Global Compact

BAT has fought to maintain its dominance of the key market of South Africa over decades, in the face of increased competition and growing illicit trade. Research from the University of Bath’s Tobacco Control Research Group describes how the company has used a number of different tactics to hold its position, and undermine tobacco control. For details see The BAT Files.

Roadmap to Tobacco Control

During the 1970s and 1980s tobacco control was not on the public agenda in South Africa. A 2003 World Health Organization (WHO) report documents how the tobacco industry used its cordial relations with the South African government to prevent tobacco control measures that would negatively impact its business.24 However, from 1994 onwards when the African National Congress (ANC) came into power there was a major turnaround in government tobacco control policy. On 19 April 2005, South Africa ratified the WHO’s Framework Convention on Tobacco Control (FCTC), which came into effect on 18 July 2005. The Treaty obliges South Africa and other Parties to protect public health policies from the vested interests of the tobacco industry.

Although South Africa was a tobacco control leader in the 1990s and early 2000s, today the country has fallen behind. 25

Tobacco Tax

Figure 1: Cigarette consumption and cigarette prices:1961-2020.26

South Africa levies excise taxes as a specific tax (i.e. fixed amount per pack of cigarettes). Unless the tax is adjusted regularly, inflation erodes the tax, which is what happened in South Africa during the 1970s and 1980s.24 When the ANC came into power in 1994, the Minister of Finance announced that the government would increase the excise tax on tobacco products from 20% (which excluded VAT) to 50% (which included VAT) of the retail price over a number of years.5 The 50% target was achieved in 1997.5

The inverse relationship between cigarette consumption and the real price of cigarettes is shown in Figure 1. As the excise tax (and retail price) increased, cigarette consumption decreased. At its peak in 1991, South Africans consumed almost 1.9 billion packs annually, which decreased to about 1 billion packs in 2016. Tobacco taxation was the main driver of the decrease in consumption.27

The method by which the excise tax is calculated depends largely on the tobacco industry’s pricing policy. The tobacco industry over-shifted the tax increases by raising retail prices more than the tax increase.28 Higher profit margins compensated the industry for the reduction in sales due to higher tax. Between 1994 and 2010, inflation-adjusted tax increased by 377% while the industry increased its net-of-tax price by 173%.28 This increased both tax revenue and the industry’s profits, despite lower sales. Up to 2010 the annual excise tax increases were driven solely by the tobacco industry’s pricing strategy.

Since 2010, the tobacco industry has introduced many low-priced cigarettes to the market. As a result, the range of cigarette prices has become much wider, and on average, cigarette prices have decreased by less than the inflation rate. The National Treasury has invoked a rule that the excise tax should grow by at least the inflation rate, when the “implied” tax increase (based on pricing and the 52% rule) is less than the inflation rate. The National Treasury has not made any significant increases in excise taxes in past few years (aside from inflation increases). In 2020, the minimum collectable tax rate (excise and VAT) on a pack of 20 cigarettes was set at R20.01 (about £0.9 in May 2020), a total tax burden of 60% of the retail price. This is lower than the WHO’s recommendation of a minimum of 70% of retail price.29

Tobacco Products Control Act 83 of 1993

The Tobacco Products Control Act 83 of 1993 is the primary tobacco control law in South Africa. There have been several amendments over the years.24 The original Act prohibited smoking on public transport and introduced health warnings for the first time.

South Africa has eight rotating text-only health warnings which have not changed since 1995. These warnings cover 15% of the front of the pack and 25% of the back of the pack.30 In 1999 the government significantly expanded the Act and included bans on tobacco advertising and sponsorship, smoking in all public places (including workplaces), and the sale of tobacco to minors. Nearly all forms of tobacco advertising and promotion are prohibited, with certain exceptions including that tobacco products may be visible at point of sale but must be displayed in such a manner that customers may not handle tobacco products prior to purchase.

The original ban on smoking in public places amounted to a partial ban in restaurants because 25% of the floor area could be enclosed and designated for smoking. This loophole persists, with the result that indoor public places are not yet fully smoke free.

New Draft Bill 2018

On 9 May 2018, Minister of Health Aaron Motsoaledi invited public comment on the proposed Control of Tobacco Products and Electronic Delivery Systems Bill, which will repeal the Tobacco Products Control Act 1993.31 The new Bill seeks to introduce plain packaging, remove designated smoking areas in restaurants, ban outdoor smoking in public areas, ban retailers displaying cigarettes and cigarette vending machines, and regulate e-cigarettes as tobacco products, among others. In September 2020, the Bill had not yet been implemented.

The tobacco industry has strongly opposed South Africa’s new draft Bill.32

Tobacco industry intermediaries and collaborators in South Africa

 The South African Tobacco Transformation Alliance (SATTA)

This alliance only includes British American Tobacco, and not the other tobacco multinationals as was the case with the defunct Tobacco Institute of South Africa. SATTA’s website says: “The South Africa Tobacco Transformation Alliance represents approximately 11 000 tobacco farmers, processors and manufacturers across five growing provinces who are committed to supporting transformation.” 33And :

The South Africa Tobacco Transformation Alliance it is described as representing people working in the tobacco farming, processing and manufacturing industries across five growing provinces who are committed to supporting transformation and economic development. 33

Members include: BATSA, Black Tobacco Famers Associations (BLFA), and Limpopo Processors (Pty) Ltd. 33

Business Leadership SA (BLSA)

BLSA is a business forum where “South Africa’s business leaders engage key players in South African society, including government, civil society and labour, to exchange ideas” 34 British American Tobacco is one of their members 35  Business Leadership SA were meant to host an event on 17 March 2020 titled “The cost of illicit trade to fiscus”. The event was postponed because of Covid-19. One of the panellists, Yusuf Abramjee, was the spokesperson for #takebackthetax, an initiative funded by the defunct Tobacco Institute of Southern Africa (TISA)

Further details on third parties working for, or on behalf of, BAT in South Africa, can be found in The BAT Files.

COVID-19 ban on cigarette sales

Cigarette sales were banned at the beginning of South Africa’s Covid-19 lockdown on 27 March 2020, as cigarettes were not regarded as “essential products or services”.36The intention of the ban was to support public health, and prevent the spread of the virus. On 23 April, the president announced that that ban would be lifted. However, on 29 April, the health minister announced that the ban would be extended. The ban was lifted on 18 August 2020, almost five months after it was initiated. 37

The ban generated a heated debate between those against and those in favour this measure. Opponents argued that there is no evidence that temporary abstinence from tobacco alleviates COVID-19 symptoms and that this measure promoted illicit trade. Furthermore, those against the ban emphasized that this measure implied a restriction on civil liberties as well as negative mental health repercussions to smokers. 38 39 In April 2020, a petition calling for cigarettes ban to be lifted was launched by activist Bev Maclean. After gathering over 600,000 signatures, Maclean joined the tobacco industry in the legal claims to uplift the cigarette ban.40

British American Tobacco and Japan Tobacco International are among the tobacco companies that initiated legal action against the South African government, to invalidate the tobacco ban. 41 Christopher Proctor, Chief Scientific Officer and Head of Scientific Product Stewardship for British American Tobacco, submitted an affidavit in June 2020 on behalf of BAT, where it was mentioned that “tobacco and vaping products are in many respects similar to coffee in the ways they are experienced and used by consumers”.

During the first hearing, British American Tobacco South Africa´s advocate Alfred Cockrell argued the ban was “unconstitutional” and “unscientific”42. The tobacco industry has a history of challenging legislation which restricts the marketing or sale of its products. For more examples, see Challenging legislation.

Supporters of the ban cited evidence indicating that smokers comprise a higher percentage of severe cases of COVID-19 than non-smokers so restricting access to tobacco would most likely improve the health outcomes of many people who contract COVID-19. They also highlighted that South Africa is particularly vulnerable to COVID-19 due to the country’s high prevalence of diabetes, tuberculosis, and HIV.

It has also been suggested that the ban reduced the risk of contracting COVID-19 for workers in the tobacco supply chain.39 43

In May and July 2020, the University of Cape Town (UCT), published two reports on how the cigarette sales ban impacted the market for cigarettes in South Africa.7 The first report used data from a sample of 12 204 smokers (collected between 29 April and 11 May 2020). The authors found that approximately 16% of surveyed smokers at the start of the lockdown were able to quit successfully (at least at the time of the survey). The report also found that 90% of the surveyed continuing smokers were able to purchase cigarettes during the lockdown period, despite the ban on cigarette sales. 7.

According to both UCT reports, the distribution network through which surveyed smokers buy their cigarettes changed. According the first report, formal retailers were the dominant outlets for cigarettes (56%) before the sales ban, but the number of people using street vendors rose from 3% to 26% during the sales ban.

The lockdown resulted in a transformation cigarette brand market share. Many surveyed smokers had to purchase unfamiliar brands, as their favourite brands were often unavailable. The survey results from the first report show that before the sales ban, 81% of smokers smoked brands produced by the multinational companies (MNCs), while 19% of smokers consumed brands produced by local or regional manufacturers. During the sales ban, 63% of smokers reported smoking brands by local producers, while 37% of smokers reported smoking brands produced by the MNCs. According to the first report, the average price of cigarettes reported by respondents increased by 90% compared to the pre-lockdown period 7

TobaccoTactics Resources

Acknowledgement

With thanks to Nicole Vellios from the University of Cape Town who contributed to this page.

Final editorial decisions were made by the Tobacco Control Research Group.

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References

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