Illicit cigarettes now account for an estimated 60% of South Africa’s market, entrenching informal distribution networks and reshaping industry competition. Photo credit: Ankit Rainloure, Pexels.
New research indicates that illegal cigarettes now dominate South Africa’s tobacco market, accounting for roughly 60% of total sales and reshaping the industry’s structure.
The findings come from a study, South Africa’s illicit cigarette crisis: Evidence from the 2021 Global Adult Tobacco Survey, by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP), published in Tobacco Control. Researchers estimate that about 6 in every 10 cigarettes sold in 2021 fell outside the legal market.
These findings, along with additional REEP research, highlight a dramatic expansion of the illicit cigarette market over time. Before the Covid-19 pandemic, illicit products made up around 30% of cigarette sales. After the government introduced a temporary sales ban in 2020, that share rose to about 60% and has not meaningfully declined since.
Researchers describe the shift as structural rather than temporary. Illicit cigarettes no longer sit on the margins of the market; they now form its core, changing competitive dynamics across the sector.
The findings point not only to rising illicit trade but also to the reshaping of the competitive landscape, as local and regional producers increasingly occupy market share once held by multinational companies.
“In the early years of the 21st century, British American Tobacco (BAT) was the dominant player with more than 90% market share. However, their market share has decreased to only about 33% in 2021,” said Mxolisi Zondi, the study’s lead author. “In contrast, Polaris Manufacturing, formerly known as Gold Leaf Tobacco Corporation, has emerged as a major player, with an estimated market share rivalling that of BAT.”
The REEP study also pinpointing specific brands and manufacturers tied to the illicit market. It found that many locally produced brands sold more than 80% of their cigarettes at prices so low that paying the full tax appeared unlikely. These products move primarily through informal retail networks, particularly spaza shops, where limited oversight makes enforcement challenging.
The study concludes that illicit cigarettes no longer sit at the margins of South Africa’s market. They now form a deeply embedded and widespread segment, largely driven by non-multinational brands operating through informal distribution channels.
To reverse the trend, researchers say authorities will need to strengthen supply chain controls and step up enforcement in the areas where illicit activity concentrates most heavily.