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The South African Tobacco Industry Updated Report Available
BY Nina Shand
South Africa
26 March 2018
R 2 040.00 (ZAR)  
estimated $ 139.93 (USD) *
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The South African Tobacco Industry


The South African tobacco industry is estimated to be worth R28.8bn and is supported by 8.2 million adult tobacco users. It is a significant contributor to the government purse, paying more than R16.6bn in excise duty and VAT in the 2016/2017 marketing season. The primary sector of the industry involves commercial and small-scale tobacco farmers situated in Limpopo, North West, Mpumalanga, Eastern Cape and Western Cape. The secondary sector focuses on the manufacture and marketing of cigarettes, pipe tobacco and snuff to the consumer. Limpopo Tobacco Processors is the biggest supplier of leaf and sells about 95% of its flue-cured tobacco to British American Tobacco, the main manufacturer in the sector.


Declining Sales


According to British American Tobacco South Africa, over the last five years company cigarette sales decreased from 22 billion to 15 billion sticks. This was the result of ‘downtrading’ to the low-priced segment of the market and higher illicit trade which remains a threat to both tobacco farmers and manufacturers. There was a 15% reduction in the domestic order for tobacco for the 2017/18 growing season and statistics from the Tobacco Institute of Southern Africa show that since 2012 tobacco manufacturers have bought 2,000 tons less tobacco leaf.


Report Coverage


The report on the South African tobacco industry describes current conditions and factors influencing the success of the industry, including government plans to further tighten legislation and the introduction of plain packaging. The negative effect of the severe drought and exceedingly hot temperatures in some areas as well as the continued illicit trafficking of cigarettes are also discussed. The report profiles 15 companies, including the three major players and smaller players such as Folha Manufacturers and Afroberg Tobacco Manufacturing. Also profiled is Gauteng-based Gold Leaf Tobacco Corporation which announced in 2017 that it planned to set up a US$1.5m plant in Harare, Zimbabwe within two years.


Page
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 4
3. SIZE OF THE INDUSTRY 5
4. STATE OF THE INDUSTRY 12
4.1. Local 12
4.1.1. Corporate Actions 15
4.1.2. Regulations 15
4.1.3. Enterprise Development and Social Economic Development 17
4.2. Continental 19
4.3. International 21
5. INFLUENCING FACTORS 24
5.1. Economic Environment 24
5.2. Health Concerns 25
5.3. Proposals to Ban the Growing of Tobacco 25
5.4. Regulations 26
5.5. Illicit Trade 27
5.6. Technology, Research and Development (R&D) and Innovation 28
5.7. Labour 30
5.8. Environmental Concerns 31
6. COMPETITION 33
6.1. Barriers to Entry 34
7. SWOT ANALYSIS 34
8. OUTLOOK 35
9. INDUSTRY ASSOCIATIONS 35
10. REFERENCES 36
10.1. Publications 36
10.2. Websites 36
COMPANY PROFILES 38
AFROBERG TOBACCO MANUFACTURING (PTY) LTD 38
AMALGAMATED TOBACCO MANUFACTURING (PTY) LTD 39
BEST TOBACCO COMPANY (PTY) LTD 41
BRITISH AMERICAN TOBACCO SOUTH AFRICA (PTY) LTD 42
CARNILINX (PTY) LTD 45
FOLHA MANUFACTURERS (PTY) LTD 47
GOLD LEAF TOBACCO CORPORATION (PTY) LTD 48
HOME OF CUT RAG (PTY) LTD 50
JT INTERNATIONAL SOUTH AFRICA (PTY) LTD 51
LEONARD DINGLER (PTY) LTD 53
LIMPOPO TOBACCO PROCESSORS (PTY) LTD 55
OTP DISTRIBUTORS (PTY) LTD 57
PHILIP MORRIS SOUTH AFRICA (PTY) LTD 59
PROTOBAC (PTY) LTD 61
UNIVERSAL LEAF SOUTH AFRICA (PTY) LTD 62
VAN ERKOMS TABAKKE (PTY) LTD 64