Inside the Factory Raids: How Illicit Cigarettes Are Really Made

Illicit cigarettes have become a significant issue in South Africa, contributing to massive revenue losses, job cuts, and public health risks. But how illicit cigarettes are really made remains hidden from most consumers. From illegal factories to the criminal networks that supply them, factory raids have uncovered shocking truths. We unpack how these illegal operations work and the measures authorities are taking to dismantle them.

The Scale of the Illicit Cigarette Market

The illicit cigarette trade in South Africa is vast, with estimates suggesting that up to 70% of cigarettes sold in the country are not taxed or regulated. Sellers often price these illegal products significantly lower than their legitimate counterparts, making them attractive to consumers. This boom in the illicit market has raised concerns about the loss of billions in tax revenue and job cuts in the legal tobacco sector.

How Illicit Cigarettes Are Really Made: The Factory Scene

One of the key areas where illicit cigarettes are made is in hidden factories that operate without oversight. These factories typically produce cigarettes that resemble well-known brands, but without paying the required taxes. In many cases, the manufacturers do not declare their production accurately, evading duties and taxes.

Read about how the rise of illicit cigarettes led to the decline of South Africa’s tobacco farms in From 125 to 10: How Illicit Cigarettes Crushed SA’s Tobacco Farms.

The Role of Low-Cost Tobacco

One of the driving factors behind illicit cigarette production is the use of cheap tobacco. This tobacco often enters South Africa through smuggling networks, bypassing customs checks. Once it arrives, illegal factories process, package, and sell it as counterfeit versions of popular brands. Without required tax contributions, sellers can offer these cigarettes at a fraction of the price, attracting cost-conscious consumers.

Unregulated Production Lines

In these illicit factories, the production lines are typically outdated and poorly maintained. Despite the lack of modern machinery, these operations can still produce large volumes of cigarettes. Unskilled and underpaid workers manufacture the products in unsanitary conditions. This results in cigarettes that are not only dangerous to public health but also lack the quality control measures that legal cigarettes undergo.

The Impact of Factory Raids on Illicit Production

Raids conducted by the South African Revenue Service (SARS) and the South African Police Service (SAPS) have uncovered the full extent of illicit cigarette production. These raids are essential in seizing illegal products, equipment, and materials, as well as arresting those involved in the illegal manufacturing process. However, the sheer scale of the problem means that factory raids alone cannot solve the issue; coordinated efforts and consistent enforcement are crucial for making a lasting impact.

The Role of Criminal Networks in the Illicit Cigarette Trade

Illicit cigarette factories are often linked to organised crime syndicates that control the smuggling, production, and distribution of these products. These networks use multiple channels to move cigarettes across borders and into South Africa’s retail market. The financial gains from the illicit cigarette trade help fund other illegal activities, contributing to the country’s broader crime problem.

Learn how global frameworks could help curb South Africa’s black market in our article: Could the WHO Protocol Be the Game-Changer in Fighting Illegal Cigarettes?

The Smuggling Pathways

Smugglers bring tobacco into South Africa through routes from neighbouring countries like Zimbabwe, Mozambique, and Swaziland. Once the cigarettes enter the country, underground sellers, including street vendors and spaza shops, distribute them. Sellers price many of these products far below the Minimum Collectible Tax (MCT), giving them a substantial price advantage over legal tobacco products.

Why Consumers Buy Illicit Cigarettes

Illicit cigarettes attract consumers due to their lower prices. Consumers can purchase illicit products for as little as R10 to R15, while legal cigarettes often cost over R40 per pack. For many South Africans, the financial incentive outweighs the potential health risks associated with these products. However, what consumers may not realise is that these cigarettes can be harmful not only due to the lower-quality tobacco used but also because of the chemicals and toxins present in the unregulated production process.

The Dangers of Smoking Illicit Cigarettes

Illegal manufacturers do not subject illicit cigarettes to the same safety and quality standards as legal ones. This means they may contain harmful chemicals, toxic substances, and carcinogens not found in legally produced cigarettes. Consumers face significant long-term health risks, especially as many unknowingly buy illicit cigarettes with unregulated dangers.

Economic Consequences of the Illicit Cigarette Market

The illicit cigarette trade has serious economic consequences. Beyond the R28 billion in lost tax revenue each year, the growth of the illegal market has hurt the legal tobacco industry. Tobacco farmers, manufacturers, and retailers are all suffering due to the rising popularity of cheaper illicit products. Job losses are also mounting as the industry shrinks, further exacerbating the socio-economic impact of this criminal trade.

Measures to Combat Illicit Cigarette Production

Experts agree that we need a multi-pronged approach to curb the illegal cigarette trade. SATTA (South African Tobacco Transformation Alliance) has been at the forefront of advocating for stronger enforcement measures. These include:

• Stronger factory inspections by SARS to identify and dismantle illicit production operations.
• Increased collaboration between government agencies, including SARS, the Hawks, and SAPS, to disrupt smuggling networks.
• Consumer awareness campaigns to educate the public about the risks of illicit cigarettes and encourage them to report illegal sales.

SATTA’s Role in Fighting Illicit Trade

SATTA has positioned itself as a leading authority in tackling the illicit cigarette trade. The organisation works alongside the South African government and industry stakeholders to develop and implement strategies that combat this growing issue. SATTA advocates for stricter penalties for those involved in the illicit trade and calls for increased resources for law enforcement agencies to tackle the problem head-on.

For a deeper look at solutions, see The Policy Fix: What South Africa Must Do to Curb Illicit Cigarettes.

The Path Forward

We cannot solve the problem of illicit cigarette production overnight. However, with continued factory raids, stronger enforcement measures, and increased public awareness, it is possible to reduce the impact of the illicit trade on South Africa’s economy and public health. SATTA’s ongoing efforts to position the fight against illicit cigarettes as a national priority are essential to ensuring a healthier and more prosperous future for the country.

Report illicit cigarettes via the SATTA portal.