An analysis of cheap cigarettes in South Africa

Abstract

Using wave 5 of the National Income Dynamics Study, conducted in 2017, this paper investigates the market for very low-priced cigarettes, which probably are illicit. We find that approximately 30% of cigarettes consumed in South Africa are bought for R20 or less per 20-pack. Low-priced cigarettes are found across all nine provinces and these products are consumed in substantial quantities across all racial and socio-economic groups. At the margin, purchase of very cheap cigarettes in South Africa is associated with lower socio-economic factors, such as having lower levels of income and educational attainment. Cheap cigarettes are also strongly associated with specific packaging types, specifically 20-packs and cartons of 200. As illicit cigarettes undermine both the fiscal and health agendas of tobacco taxation policy, we strongly urge the relevant authorities to implement measures to curb the illicit trade.