Illicit cigarette trade extinguishes British American Tobacco in SA

Will South Africans be paying more for cigarettes? This will be on the minds of smokers following an announcement that cigarette giant British American Tobacco South Africa (BATSA) will pull out of the country. In an explosive revelation, BAT South Africa announced on Thursday that it will cease local production of factory-manufactured cigarettes (FMC) and close its sole South African manufacturing facility by the end of 2026.

The decision by London and Johannesburg will see the group not manufacturing cigarettes for the first time in more than 70 years, resorting to imports to serve the local market. The maker of Dunhill and Pall Mall cigarettes said this closure was a result of the devastating impact of the “illicit cigarette trade on the local market.” However, the company emphasised that it “remains committed” to the South African market and will transition from a local manufacturing model to an import-based supply chain to continue serving adult consumers. “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.

South Africa loses about R30 billion in revenue every year due to the illicit trade in cigarettesand liquor, according to a new report, almost three times as much as the government wanted to collect by increasing VAT. According to theTransnational Alliance to Combat Illicit Trade (Tracit) report for 2025,published on 6 May 2025, South Africa is doing worse now than in 2019 and 2023 in combating illicit trade and other illicit economic activities across sectors, including alcohol, tobacco, foodstuffs, agrichemicals, pharmaceuticals, counterfeiting, mining and wildlife trafficking. Located in Heidelberg, Gauteng, the facility currently operates at just 35% of total capacity due to severe volume losses, directly attributable to the exponential growth of the illicit tobacco trade in South Africa.

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“This is an incredibly difficult day for BATSA and for the approximately 230 employees and families whomay 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.”

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