New research has found the consumption of illicit cigarettes is not as high as claimed by big tobacco, photos of diseased teeth and gums accompanied by graphic health warnings on packaging lead to reduced demand, and the 20-week ban on cigarette sales in 2020 led to the entrenchment of the illicit market.
These findings, released on Wednesday, were made by Nicole Vellios of the Economics of Excisable Products (REEP) research unit at UCT as part of her PhD.
Vellios’ work is particularly relevant in light of the recent approval of the Control of Tobacco Products and Electronic Delivery Systems Bill by the Forum of Directors-General (Fosad), meaning it is ready to go before cabinet.
As part of her research, Vellios conducted an experiment in which she invited 28,000 UCT students — smokers and non-smokers — to participate in a survey. They were shown a variety of cigarette packaging and products, ranging from plain packaging showing no branding or colours, only the standard health warning, branded packaging, an illicit pack and some with photographs of disease accompanied by graphic health warnings.
Vellios did not look at the cost of packaging because this is carried by the industry, nor did she look at advertising because cigarette ads are banned in SA. The brand selected for the study was Peter Stuyvesant as the most recognisable mid-level choice, while Caesar was selected for the illicit brand. The products were listed with the price with health warnings on the individual cigarettes “sticks” placed on some.
“The results show for non-smokers the branded products were the most likely to be their choice if they ever decided to try smoking, with the illicit cigarettes coming in second, while smokers were more sensitive to price and more likely to go with Caesars than non-smokers,” Vellios said.
Stick warnings — health messages printed on the actual cigarette and therefore visible when raised to the mouth — were found to be effective deterrents.
“For smokers, the branded pack with no stick warning was the most popular, much more so than the branded packs with the stick warnings.”
The policy implications, according to her research, are that mandatory plain packaging will reduce the demand for cigarettes, particularly if accompanied by graphic health warnings on the pack and warnings on the cigarettes.
Vellios’ research on the illicit cigarette market found the 20-week sales ban on tobacco products during lockdown in 2020 entrenched the illicit market and a reduction in Sars enforcement functions since 2014 have led to lower excise and VAT payments.
Increasing excise tax, which leads to higher priced cigarettes, was found to be the biggest deterrent.
Speaking at the research briefing, Dr Sharon Nyatsanza of the National Council Against Smoking said: “While an overstatement of the illicit trade of tobacco products may suit the tobacco industry agenda ahead of the mid-term budget, it should not deter strong tax increases aimed at reducing tobacco consumption in SA.”
The focus should be on strong law enforcement and securing the tobacco supply chain to reduce illicit trade.
Vellios said a gap analysis had found the illicit trade was between 54% and 58% of the total market in 2021.
“While Batsa (British America Tobacco SA) has been headlining with comments that nearly 70% of all cigarettes consumed in the SA market are from illicit brands, this is simply not true,” Vellios said, explaining the complicated manner in which industry insiders had made their incorrect calculations.
Nyatsanza said the sale of illicit tobacco products at ridiculously low prices, making them more accessible and affordable to young people, was a major concern and undermined health policy.
Government had yet to ratify the Protocol to Eliminate Illicit Trade in Tobacco Products, which proposes measures to tackle illicit trade.
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