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Tobacco bill likely to hurt small businesses already struggling to keep lights on

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The Department of Health has tabled the new tobacco bill in Parliament, which introduces onerous restriction and experts have warned will force many small and micro businesses to close their doors, placing them and their employees at risk.

The new tobacco bill bans the display of all tobacco products, including harm-reduction products such as e-cigarettes, vapes and heat-not-burn products, at retail level, even in specialist tobacco stores. Picture: Reuters

THE DEPARTMENT of Health has tabled the new tobacco bill in Parliament which introduces onerous restriction and will force many small and micro businesses to close their doors, placing them and their employees at risk.

This was according to Diane Bravo, the owner of specialist tobacco retailer, Casa Tabacs. Bravo also owned Sturks, the oldest tobacco store in South Africa, established in 1793, which she had to shut down as a result of the government’s Covid-related tobacco ban.

Her warning follows hard on the heels of the announcement two weeks ago that British American Tobacco South Africa had begun consultations that might involve cutting up to 200 skilled jobs, due to ongoing losses in cigarette volumes. The company blamed this on the illicit cigarette trade that exploded during the Covid related ban on tobacco sales, and which has remained part of the trade ever since.

In 2019, BAT South Africa permanently employed around 1,800 staff, but more than 30% of those have been retrenched since 2020. Over the same period, the company said it lost lost around 40% of its cigarette sales.

The Tobacco Products and Electronic Delivery Systems Control Bill bans the display of all tobacco products, including harm-reduction products such as e-cigarettes, vapes and heat-not-burn products, at retail level, even in specialist tobacco stores. Cigarette advertising has already been banned in South Africa for 20 years.

Bravo believes the new bill will hand over the remaining legal tobacco sector to organised criminals.

“The tobacco ban during the pandemic should have been a lesson in how not to legislate, and to properly consider the unintended consequences of new laws. During the ban, the legal sector’s market share plummeted as they were unable to sell. The result was that the illicit tobacco market, which continued to sell illegal and counterfeit cigarettes and tobacco products, entrenched their dominance in the SA market,” Bravo said.

Australia was the first country to mandate plain packaging on all tobacco products in August 2012, and since then another 21 countries have implemented plain packaging, according to a statement from the University of Cape Town in December.

The university said findings from a doctoral thesis by Nicole Vellios that investigated quitting behaviour in South Africa, revealed that plain packaging (where manufacturers can only print, on a dull background, the brand name in a standard size, font, and position on the pack) would effectively reduce people’s utility for cigarettes, and plain packaging might even create an incentive for some smokers to quit smoking.

Bravo said, however, that the ban on displaying a legal tobacco product in a specialist tobacco store is tantamount to a complete ban on the sale of those products.

“As a specialist tobacco retailer, I can’t imagine what my store will look like if I can’t display any of the products that I sell. At the very least, the government should exempt specialist tobacconists, who don’t sell products to anyone younger than 18. Those that enter our stores, only do so to buy tobacco products,” she said.

According to the new bill, the penalties for displaying a single tobacco product, even if it’s left on the counter inadvertently, will be a fine and, or 10 years in prison.

According to Professor van Walbeek from the UCT’s Research Unit on the Economics of Excisable Products (Reep), the effects of the tobacco ban, which was lifted in August 2020, have been irreversible and have entrenched the illicit trade, which is now sitting at 54% of the total trade.

“We can barely keep the lights on due to load shedding, and now you want to completely switch them off with a display ban. How much more do small businesses need to endure to survive? It’s enough,.” said Bravo.

BAT South Africa did not respond to further questions from Business Report.

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