BUSINESS NEWS - With the ban of the sales of cigarettes and tobacco products being lifted under lockdown level 2, the Fair-Trade Independent Tobacco Association (Fita) says a price increase on the smoking sticks is not on the cards yet.
In the five-month legal sales hiatus, the ban on cigarettes was reportedly costing the country up to R38 million on a daily basis in lost excise duties, with the organisation insisting that the ban should not be imposed under any lockdown level.
Speaking on Jacaranda FM, Fita chairperson Sinenhlanhla Mnguni confirmed that the industry wasn’t looking to increase prices on cigarettes despite enduring difficulties under the ban.
“As things currently stand nothing has come to our attention on our members increasing their pricing. I think it’s still too premature at this stage, I think no one really knows how the market is going to behave,” he said.
Mnguni noted that it was risky to increase prices at this stage due to South Africans being charged exorbitant prices for cigarettes sold by the “black market”.
“Inasmuch as people are being affected by months of inactivity, at this point I think a lot of people are still trying to understand it and of course, not try to kill the consumers who have voiced their opinion and concerns in that they’ve been paying exorbitant prices for the last five months.
“We do not want to be seen as opportunistic and these are factors one needs to consider so at this point, nothing as far as an increase,” he added.
This comes in light of Fita’s decision to drop its case against government over the tobacco sales ban, The Citizen reported on Wednesday.
Fita had approached the Pretoria High Court in May with an urgent application against Cooperative Governance and Traditional Affairs (Cogta) Minister Nkosazana Dlamini-Zuma, for the ban to be lifted.
Mnguni explained that it was a “hard decision” to drop the case, with both parties having agreed to pay their own legal costs in the process.
“A hard decision had to be made in terms of that. You know that the costs of litigation are astronomical, particularly when you take the matter all the way to the apex court of this country.
“Our legal bill at this point is in the millions and of course, beyond the financial costs of litigation, one also has to look at the effort as far as the labour intensiveness of such an application and the resources which are required.
“Our members, having just come out of a five-month period of largely no activity, have elected at this point to focus on trying to get their businesses off the ground,” he added.
In terms of the settlement reached, Cogta spokesperson Lungi Mtshali argued that the parties have not reached an agreement yet.
“Fita asked us not reinstate the ban in future, which we couldn’t agree to, and then they came back and asked us to consult with Fita specifically if the ban was reinstated, which we also couldn’t agree to,” Mtshali said.
Additional reporting from Bernadette Wicks