Johannesburg - Could we be witnessing the death of the vaping industry in South Africa?
The Vapour Products Association of South Africa (VPASA) certainly thinks that the government's latest move to inflate e-liquid prices is a dagger to the heart of vapers and its industry in South Africa.
It was announced recently that a flat excise duty rate of R2.90 per millilitre for nicotine and non-nicotine vaping liquids (e-liquids) would come into effect from this month.
This will see e-liquid prices inflate from 5.8% to 217%, depending on the volume and current retail price.
The Vape Association believes the latest tax increase will be detrimental to those using vaping to stop smoking as well as local small businesses, doing more harm than good.
“Our fear is that this tax will have several consequences,” said Asanda Gcoyi, the CEO of VPASA.
“It will enable a DIY market that cannot be controlled because people will start mixing their own e-liquid at home. Informal sellers will mushroom and sell products we have zero control over, and they will not be paying tax.”
“Vapers may also go back to smoking cigarettes.”
Gcoyi labelled the drastic inflation in e-liquid prices as “absurd” and that government’s latest move will prove beneficial for the tobacco industry.
“It goes against what government has been saying is a concern about the high smoking rates in the country. It says to us that all this talk about wanting to decrease the number of smokers is nothing but lip service.
“We know that the biggest winners in all of this is the tobacco industry, especially the illicit market, and the biggest losers are current smokers who are being deprived the opportunity to move to a less harmful alternative to satisfy their nicotine addiction.”
Gcoyi added that the latest move by government made no sense.
“They have said that they want to discourage the use of vaping products because nicotine is an addictive substance. The question is: then why tax non-nicotine e-liquid at the same rate as that containing nicotine?”
She says from the latest research by the Cochrane Library published in November 2022 that there is “high certainty evidence that nicotine e-cigarettes are more effective than traditional nicotine-replacement therapy (NRT) in helping people quit smoking.”
“With this latest finding from a credible resource like Cochrane Library, we should be encouraging smokers to switch to vaping and not asking them to dig deeper into their pockets, which we know they cannot do with the high cost of living. This means South African smokers will, unfortunately, have to continue smoking.”
She says the increase has caused uncertainty in the vaping industry.
“We all agree that this tax is too high as an introductory rate, but we also know that we have to comply with the law. We will be watching what impact the tax has not only on sales but on jobs. In a country where unemployment rates are at record highs, one would think that our government will do everything it can to preserve people's livelihoods.”
So what options remain for those trying to quit smoking now that the price of vaping has shot up so drastically?
Gcoyi said: “The Department of Health proposes these methods: quit, die or use NRTs. Neither option has done wonders for tobacco control if one considers that smoking rates in South Africa have actually increased entirely due to misguided government policy in tobacco control.
“For instance, lax enforcement on illicit trade and the blanket ban on the sale of tobacco and vaping products during COVID-19, which gave the illicit market a pre-eminent position in the South African market.”
Kurt Yeo, the co-founder of Vaping Saved My Life (VSML), said government’s decision to inflate e-liquid prices will have the biggest impact on small local businesses.
“At the manufacturing point, the excise will see unit prices increase by R87 for 30ml to R348 for 120ml, excluding VAT.
“These sudden increases will not only have an immediate impact on small independent vape shops’ cash flow but will see the retail prices double on the most popular product range, which these shops rely on to keep their doors open in the coming month.
“Many consumers who rely on these products and support their small local vape shop will be faced with tough decisions. Consumers will either move to cheaper closed-system vapes found in every retail shop (which will see an increase of R5.80 to R29 per unit), try to find similar products on the black market, attempt to make their own e-liquid or go back to now cheaper cigarettes.
“This will force many shops, and eventually, manufacturers to close.”
He says the illicit cigarette trade started before the 2020 sales ban and has grown over the years based on the demand for cheaper products.
“Unlike cigarettes, which are homogeneous, e-liquids are just that, a liquid which can be transported and disguised as any household or manufacturing product. This will certainly make it easier for bad actors to move illicit products.”
Yeo agrees with Gcoyi that the drastic increase in e-liquid prices makes no sense.
“The excise comes before any regulations or standards have been passed on the product category. The Tobacco Products and Electronic Delivery Systems Bill was only presented to the Portfolio Committee of Health on 31 May 2023.
“It could be said that by following this route National Government has ordained the use of these products irrespective of who (the youth), what or how, as long as the tax is paid. Is this a public health strategy or just another revenue stream for the government?”
Yeo is of the belief that the price increase was introduced to offer government another revenue stream.
“The government has stated that the inflation was to curb the uptake, especially the youth. However, it will become clear this will have little to no impact. South Africa has fallen far behind in meeting guidelines, as set forth by the World Health Organization’s Framework Convention on Tobacco Control, and introducing an excise on all “tobacco” products is a quick win. Having this win will help sugar-coat the recent escalation in smoking rates (16.2% 2012 – 25.8% 2021) as well as the massive illicit cigarette trade problem in the country.”
Yeo said 80% of the world’s smokers are found in Low- or Middle-Income Countries (LMIC), and the majority of smokers are in the lower income brackets.
“SA has no public smoking cessation strategy. With no cessation support at public healthcare facilities, no cessation clinics and none of the approved smoking cessation aids available on the essential medicines list, most smokers in this country are left with the “quit or die” approach.”
“This approach will only see 4% of smokers wishing to quit eventually succeed. Many that were able to afford this approach will now find it difficult to justify the elevated cost.
Yeo says general panic has set in from vapers in the country following the latest increase.
“I can’t comment on the industry, but I have heard of panic buying and stockpiling from customers, so there is a suggestion that panic has set in.”