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The South African Tobacco Industry
BY Nina Shand
South Africa
05 July 2019
R 14 400.00 (ZAR)  
estimated $ 1 016.14 (USD) *
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The Tobacco Industry


The tobacco manufacturing industry in South Africa, that is estimated to be worth close to R30bn and supported by nearly 8 million adult tobacco users, continues to be seriously affected by the rampant growth in illicit cigarettes. The number of legally-declared cigarettes declined more than 20% between 2013 and 2018, while industry sources say the illegal trade grew to 33% of the total market in 2018. The industry contributed R10.9bn in excise duty to the fiscus in 2017/2018, a decline of nearly R2bn from 2015/16, despite increased taxes.


Multiple Challenges


The rampant illicit trade in cigarettes is blamed for the reduction in cigarette sales volumes of multinational tobacco companies and lower leaf orders to the estimated 176 commercial tobacco farmers and 155 small-scale farmers. At the same time, the e-cigarette market is estimated to have grown to be worth R1bn, but faces regulation in the form of the proposed Control of Tobacco Products and Electronic Delivery Systems Bill. Another key issue facing the industry is government’s plan to further tighten legislation on smoking and the introduction of plain packaging. Health concerns associated with tobacco are expected to continue to affect consumption.


Report Coverage


This report covers the tobacco manufacturing industry, including the size and state of the industry and the factors that influence it. These include detailed descriptions of proposed legislation, the illicit tobacco trade and the e-cigarette market. There are profiles of 16 companies including British American Tobacco South Africa which is estimated to hold 74% of the legal market and 22 out of around 30 brands. There are also profiles of Philip Morris, with leading brands Marlboro and Chesterfield, and its subsidiary Leonard Dingler, which manufactures products such as pipe tobacco and snuff. Other profiles include Limpopo Tobacco Processors, the biggest single supplier of tobacco leaves to local buyers.


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 8
4.1. Local 8
4.1.1. Corporate Actions 11
4.1.2. Regulations 12
4.1.3. Enterprise Development and Social Economic Development 14
4.2. Continental 16
4.3. International 19
5. INFLUENCING FACTORS 23
5.1. Economic Environment 23
5.2. Health Concerns 24
5.3. Proposals to Ban the Growing of Tobacco 25
5.4. Regulations 25
5.5. Illicit Trade 26
5.6. Technology, Research and Development (R&D) and Innovation 28
5.7. Labour 30
5.8. Environmental Concerns 32
6. COMPETITION 33
6.1. Barriers to Entry 34
7. SWOT ANALYSIS 35
8. OUTLOOK 36
9. INDUSTRY ASSOCIATIONS 36
10. REFERENCES 36
10.1. Publications 36
10.2. Websites 37
APPENDIX 1 39
Summary of Notable Players 39
COMPANY PROFILES 44
AFROBERG TOBACCO MANUFACTURING (PTY) LTD 44
AMALGAMATED TOBACCO MANUFACTURING (PTY) LTD 45
BEST TOBACCO COMPANY (PTY) LTD 47
BRITISH AMERICAN TOBACCO SOUTH AFRICA (PTY) LTD 48
CARNILINX (PTY) LTD 51
FOLHA MANUFACTURERS (PTY) LTD 53
GOLD LEAF TOBACCO CORPORATION (PTY) LTD 54
HOME OF CUT RAG (PTY) LTD 56
JT INTERNATIONAL SOUTH AFRICA (PTY) LTD 58
LEONARD DINGLER (PTY) LTD 60
LIMPOPO TOBACCO PROCESSORS (PTY) LTD 62
OTP DISTRIBUTORS (PTY) LTD 64
PHILIP MORRIS SOUTH AFRICA (PTY) LTD 66
PROTOBAC (PTY) LTD 68
UNIVERSAL LEAF SOUTH AFRICA (PTY) LTD 69
VAN ERKOMS TABAKKE (PTY) LTD 71