By Timothy S. Donahue
Top Takeaways:
- BATSA will close its Heidelberg factory and end local cigarette production by end-2026, affecting about 230 jobs.
- BAT says illicit cigarettes now account for about 75% of South Africa’s cigarette market, leaving the plant operating at 35% capacity.
- The company expects to supply the market via imports after the closure, following consultations with unions and staff.
British American Tobacco’s South Africa unit will shut its only local cigarette manufacturing facility and end domestic cigarette production by the end of 2026, citing a sharp decline in legal sales due to the country’s expanding illicit cigarette market.
BAT South Africa (BATSA) said the closure will affect about 230 jobs at its Heidelberg factory in Gauteng province. The plant is operating at roughly 35% of capacity due to “severe volume losses” tied to the illegal cigarette trade, the company said.
“With approximately 75% of the South African cigarette market now estimated to be illicit, continued local manufacturing has become unviable,” Johnny Moloto, head of corporate and regulatory affairs at BAT Sub-Saharan Africa, said in a statement carried by Reuters.
BATSA said it will begin a formal consultation process with employees and unions in line with South African labor requirements while shifting supply to imported products to serve the local market. Bloomberg reported that BAT plans to rely on imports after shutting the factory.
The announcement comes as South Africa continues to grapple with the entrenched illicit tobacco trade, which intensified during the country’s COVID-era tobacco sales ban and remains a major enforcement and tax issue. BAT and other industry stakeholders have long argued that the scale of illegal sales undermines legal manufacturers and erodes government excise revenue.
