BATSA announced it will cease local production of factory manufactured cigarettes.
Image: Supplied
British American Tobacco South Africa (BATSA) has announced it will close its Heidelberg manufacturing plant by the end of 2026, ending local cigarette production in a move it says is aimed at nipping a worsening illicit trade crisis in the bud and hopefully ending the steady erosion of the legal market.
The decision brings to an end more than 50 years of local cigarette manufacturing and places approximately 230 jobs in the Lesedi Municipality at risk.
BATSA who produces brands such as Pall Mall, Peter Stuyvesant, Rothmans, Benson and Hedges, Kent and Dunhill, will shift from domestic production to an import-based supply chain but insists it remains committed to the South African market.
“With approximately 75% of the South African cigarette market now estimated to be illicit, continued local manufacturing has become unviable,” said Johnny Moloto, Head of Corporate & Regulatory Affairs at BAT Sub-Saharan Africa.
The Heidelberg facility, which has been part of the local community since 1975, is currently operating at just 35% of its total capacity. BATSA attributes the severe decline in production volumes directly to the rapid expansion of the illicit tobacco trade, which has increasingly crowded out legitimate manufacturers.
“This is an incredibly difficult day for BATSA and for the approximately 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 said the closure follows more than a decade of engagement with government departments and law enforcement agencies, during which it repeatedly warned that weak enforcement and policy failures were enabling illicit trade to flourish.
The company points to the 2020 Tobacco Sales Ban, later declared unconstitutional, as a critical turning point from which the legitimate cigarette market never recovered. It also argues that repeated above-inflation excise increases have widened the price gap between legal and illegal products, making illicit cigarettes more accessible to consumers.
Concerns have also been raised about proposed new tobacco legislation currently before Parliament. In a presentation to the Portfolio Committee on Health last year, the South African Revenue Service (SARS) warned that the legislation could further worsen illicit tobacco trade.
“BATSA has raised these concerns for years, providing data and proposing solutions. While some in government have genuinely tried to help, the overall response hasn’t been enough to protect legitimate businesses and the jobs they create. With the illicit industry’s current size and scale, only a co-ordinated, whole of government response can make a real impact,” Moloto said.
The impact of the closure is expected to extend beyond factory workers, with BATSA warning that suppliers, contractors and logistics providers linked to the Heidelberg plant will also be affected.
“We have tried everything to ensure we don’t have to close this facility, which has been a part of the Heidelberg community since 1975, including implementing various efficiency initiatives over the years,” noted Moloto. “But when three-quarters of your market is illicit, there’s a limit to what any company can do. We’ve reached that limit.”
BAT confirmed that it would reconsider local manufacturing should there be a substantial and sustained improvement in the illicit trade environment, signalling that the decision is not necessarily permanent.
BATSA believes the closure highlights a growing threat to South Africa’s broader economy, warning that illicit trade is no longer confined to tobacco and is increasingly affecting multiple sectors.
“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,” Moloto said.
“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.”
BATSA confirmed it has begun a formal consultation process with affected employees and union representatives in line with Section 189A of the Labour Relations Act. The consultation is expected to conclude by the end of March 2026, with the full closure of the Heidelberg manufacturing facility planned for the end of 2026.
tracy-lynn.ruiters@inl.co.za
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