Illicit cigarettes have quietly come to dominate South Africa’s tobacco market — not on the margins but at its core.
New research from the University of Cape Town (UCT) has revealed that roughly 60% of all cigarettes sold in the country in 2021 were probably illicit, marking a dramatic shift in both the structure of the market and the risks it poses to public health and state finances.
The study, conducted by researchers at UCT’s Research Unit on the Economics of Excisable Products (Reep) and published in Tobacco Control, paints a picture of an industry that has been reshaped over the past decade and accelerated by the shock of the Covid-19 tobacco sales ban.
Before 2020, illicit cigarettes accounted for about 30% of the market. The temporary prohibition on tobacco sales during the pandemic created conditions for the share to double. Years later, the researchers found, it has not meaningfully receded.
What was once a parallel market now appears to be the dominant one.
“The research identifies a substantial structural shift in the South African cigarette market,” said Mxolisi Zondi, the study’s lead author, in a statement.
“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.
“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 findings suggest not just growth in illicit trade but a reconfiguration of power within the industry itself, with local or regional producers increasingly filling the space once dominated by multinational firms.
Unlike earlier studies, the Reep research goes further by identifying specific brands and producers linked to illicit trade. For many locally produced brands, more than 80% of cigarettes were sold at prices so low that it was highly unlikely that the full tax had been paid.
The products, the study found, are most often distributed through informal retail channels, especially spaza shops, where oversight is limited and enforcement is difficult.
But the impact is not evenly spread. The research highlights a clear social gradient in illicit cigarette consumption.
Cheaper, untaxed cigarettes are disproportionately used by lower-income smokers, people with less formal education and heavier smokers — groups more vulnerable to both economic strain and health risks.
The issue cuts across two of the government’s key objectives: reducing smoking rates and collecting excise revenue. Illicit trade undermines both. By making cigarettes more affordable, it weakens public health interventions aimed at discouraging smoking. At the same time, it deprives the state of billions in potential tax income.
The researchers argue that the scale of the problem demands urgent and targeted intervention.
Their analysis, based on nationally representative data from the 2021 Global Adult Tobacco Survey, uses price thresholds to identify cigarettes that are unlikely to have had full taxes paid. It also maps brands to producers and examines the characteristics of consumers most likely to purchase illicit products.
The conclusion is that the illicit cigarette trade in South Africa is no longer peripheral. It is entrenched, widespread and largely driven by non-multinational brands operating through informal distribution networks.
Reversing that trend, the study suggests, will require decisive action to secure the tobacco supply chain and a far more focused enforcement effort on the parts of the market where illicit trade is most concentrated.
“The illicit cigarette trade in South Africa is rampant and driven mostly by non-multinational brands and informal retail channels,” the authors said. “It threatens public health and causes significant tax revenue losses. The insights from this study can inform enforcement strategies.”
Illicit cigarettes make up about 60% of South Africa’s market, according to research from the University of Cape Town, raising alarm over lost tax revenue and growing public health risks
