Illicit Cigarette Trade Soars to Record High, Bleeding SA of R28 Billion
South Africa’s illicit tobacco trade has reached record levels in 2025, with 76.6% of cigarettes sold below the legal tax threshold, according to a study commissioned by British American Tobacco (BAT).
The research, conducted by Ipsos, surveyed 4,812 retailers nationwide and found that nearly 70% of outlets were selling cigarettes for under R20 per pack, far below the Minimum Collectable Tax (MCT) of R26.22.
These untaxed products, often locally manufactured, are estimated to cost the country R28 billion in lost revenue annually or R100 million every working day.
The study revealed that 91% of illicit cigarettes originate from 14 domestic manufacturers, with hotspots concentrated in the Eastern, Northern and Western Cape, as well as the North West province.
In these regions, over 80% of sampled stores sold cigarettes at or below the MCT threshold.
Moneyweb reported that despite intensified enforcement efforts, the same manufacturers continue to dominate the illicit market, gaining ground through practices that bypass tax and regulatory compliance.
Experts from FTI Consulting and the University of Cape Town argue that legal profitability requires a minimum retail price of R35 per pack, factoring in excise duties, VAT, production costs, and distribution margins.
The current market, however, sees products sold for as little as R5 per pack, undermining legitimate businesses and eroding public revenue.
BAT’s head of corporate and regulatory affairs, Johnny Moloto, says existing strategies to curb illegal sales are failing and calls for urgent reforms to level the playing field.
