BAT South Africa announces closure “by the end of this year” as illegal trade nears 75%.
British American Tobacco South Africa (BATSA) has announced plans to cease local production of factory-manufactured cigarettes and close its sole South African manufacturing facility, citing the scale and growth of illicit cigarette trade in the local market. BATSA will cease local production of factory manufactured cigarettes and close its sole South African manufacturing facility by the end of this year.
Heidelberg Plant Jobs at Risk
The BATSA facility is in Heidelberg, Gauteng, and is operating at “just 35%” of total capacity due to “severe volume losses” that BATSA attributes directly to the “exponential growth” of illicit trade.
Speaking on the closure, Johnny Moloto, Head of Corporate and Regulatory Affairs at BAT Sub-Saharan Africa, said: “This is an incredibly difficult day for BATSA and for the about 230 employees and families who may be affected. These are skilled, dedicated people who have given years of service, who unfortunately are affected by an illicit market that operates outside of the regulatory net.”
BATSA’s Rationale and Policy Concerns
Moloto links the business decision to the estimated size of illicit trade, stating: “With about 75% of the South African cigarette market now estimated to be illicit, continued local manufacturing has become unviable,” and adding: “But when three-quarters of your market is illicit, there’s a limit to what any [one] company can do. We’ve reached that limit,” he adds.
According to BATSA, several policy decisions worsened the situation, including the 2020 Tobacco Sales Ban and above-inflation excise increases, and that proposed tobacco legislation before Parliament would exacerbate South Africa’s illicit trade issues.
Supply chain shift, consultations, and conditions for re-investment
BATSA says it will remain committed to the South African market and transition from a local manufacturing model to an import-based supply chain.
It also states BATSA has started a formal consultation process in accordance with Section 189A of the Labour Relations Act, expects to conclude it by the end of March, and plans full closure by the end of this year.
Moloto adds that “only a coordinated, whole-of-government response can make a real impact,” and confirms: “Should there be a substantial and sustained trend change in the local illicit trade environment, BAT will re-invest in local production in South Africa.”
Wider Impact
BATSA claims the closure will affect more than factory employees, pointing to the wider Lesedi community, including suppliers, logistics providers and contractors, that depend on the facility.
Moloto also warns: “Illicit trade doesn’t just hurt companies – it destroys jobs and communities. And all indicators are that illicit is becoming a significant issue in multiple industries, including alcohol, pharmaceuticals and cosmetics, food, clothing and even toys,” and adds: “If this can happen to a facility that’s been operating for 50 years, it can happen to anyone. We hope this is a reminder that enforcement isn’t just about collecting taxes – it’s about protecting the people who work in legitimate businesses.”
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