South African government’s ban on cigarette sales is facilitating a significant boom for the illegal cigarette market.  This will result not only in the decimation of legal, small businesses, but also lead to widespread job losses. 

This is according to Warren Dreyer of JJ Cale Tobacconists, who owns 15 specialist tobacconists across the country, and employs 121 staff.

As a result of the ban, JJ Cale has put its expansion plans, which included 5 new stores, on hold, and the future of its existing business and livelihood of its employees hangs in the balance.

Last week, members of the UCT Research Unit on the Economics of Excisable Products, conducted an online survey among smokers to determine how they responded to the ban during lockdown.  The survey was conducted among 16 000 respondents.  

Results found that around 90% of respondents had purchased cigarettes during lockdown, but that 46% of those had migrated from their usual brand, to the many illegal brands that exist in the market.

The survey also found that where 56% of smokers purchased their cigarettes from formal retailers before the lockdown, this decreased to 3% after the lockdown.  The average price of cigarettes increased by 53%, with variations per province, and importantly, the average price of a stick (single cigarette), increased by 90% from the pre-lockdown period.

Warren Dreyer, owner of JJ Cale says:  “It is perhaps the best time in history to be in the illegal cigarette trade.  For them, business is booming. They are making money hand over fist and unfortunately, none of that is going to the government.  On the other end of the scale, the lockdown has been profoundly negative for legal small businesses that employ large numbers of people, pay their taxes and comply with the laws of the country.  Government has enabled this shift, and it is deeply worrying, on every level.”

“We urgently call on Government to listen to the people whom they serve, but also to their own ministerial advisors and experts, who are calling for a sensible lifting of the ban.  We are the only country in the world that has banned the sale of tobacco products, and it is causing irreparable harm to legal business and the millions of employees that they sustain,” concludes Dreyer.

Issued by Warren Dreyer of JJ Cale Tobacconists