BAT South Africa has scaled back its delivery supply chain due to the explosion in illicit cigarette sales, which it says now accounts for about 70% of the market.
“Until now, Batsa has had substantial contracts in place with third-party logistics and security companies to safely deliver its products directly to retail stores. However, these contracts have been discontinued, with an estimated 500 jobs in the security and logistics part of the company’s value chain being impacted,” says Batsa.
“For a long time, Batsa has been reluctant to scale down our distribution operations in view of the potential impact on our highly integrated supply chain. However, the business must take urgent action to enhance efficiencies as we try to mitigate the impact of illicit trade and an uncertain regulatory environment.
Moloto says the draft Tobacco Products and Electronic Delivery Systems Control Bill will make matters worse, as it appears tailor-made to benefit the illicit sector. The bill will further curtail South Africa’s legal tobacco industry, which is already under 30% of the total market, while failing to address illicit trade in any capacity, thereby further aiding criminal activity.
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