British American Tobacco South Africa (Batsa) has announced it will shut down its only cigarette manufacturing plant in South Africa by the end of this year, citing the rapid growth of the illicit tobacco trade as the primary reason for the decision.
The Heidelberg facility in Gauteng, which has operated since 1975, will cease production of factory-manufactured cigarettes as Batsa shifts from local manufacturing to an import-based supply model. The company said it remains committed to the South African market and will continue supplying legal products to adult consumers through imports.
Batsa said an estimated 75% of the cigarette market in South Africa is now illicit, making local production economically unviable. The Heidelberg plant is currently operating at just 35% of its capacity due to declining legal sales.
“This is an incredibly difficult decision,” said Johnny Moloto, head of corporate and regulatory affairs for sub-Saharan Africa at Batsa. “About 230 employees and their families may be affected. These are skilled people whose livelihoods are being undermined by an illegal market operating outside the regulatory system.”
The company said it has raised concerns with government and law-enforcement agencies for more than a decade, warning that weak enforcement and policy decisions had fuelled the illicit trade. It pointed to the 2020 tobacco sales ban and repeated above-inflation excise tax increases as factors that widened the price gap between legal and illegal cigarettes.
Batsa also warned that proposed new tobacco legislation before Parliament could further worsen illicit trade. In submissions to the Portfolio Committee on Health last year, the company cited statements by the South African Revenue Service indicating that the proposed laws could strengthen illegal markets rather than curb smoking.
“We have tried everything to keep this factory open,” Moloto said. “But when three-quarters of your market is illegal, there is a limit to what any company can do.”
Beyond factory workers, Batsa said the closure would affect the wider Lesedi community, including suppliers, transport operators and contractors linked to the plant.
The company said it would reconsider local manufacturing if there were a sustained improvement in enforcement and a significant reduction in illicit trade. For now, it has begun consultations with employees and unions under Section 189A of the Labour Relations Act, with the process expected to conclude by the end of March.
Batsa said the situation highlights a broader risk to South Africa’s formal economy, warning that illicit trade is increasingly affecting sectors such as alcohol, pharmaceuticals, food, clothing and cosmetics.
