After half a century of production, British American Tobacco (BAT) will stop making cigarettes in South Africa by the end of this year, blaming policy failures and the illicit market for making legal manufacturing economically impossible. British American Tobacco South Africa (Batsa) announced on Thursday, 15 January that it would lose its Heidelberg manufacturing facility in Gauteng and cease local production of factory-manufactured cigarettes by the end of 2026. The decision brings the curtain down on a facility that has been operating in the Heidelberg community since 1975.
Batsa said the closure threatens about 230 jobs in the Lesedi Municipality as it transitions to an import-based supply chain. The company confirmed in a statement that a formal consultation process with workers and unions began on Thursday and is expected to reach a conclusion by the end of March 2026. While the decision to close the factory is final, the company said individual employment outcomes would be determined through that process.
Batsa has laid responsibility for the closure at the door of the illicit cigarette trade, which it estimates now accounts for around 75% of the South African market. As a result, the Heidelberg plant has been operating at just 35% of its production capacity. “This is an incredibly difficult day for Batsa and for the approximately 230 employees and families who may be affected,” said Johnny Moloto, head of Corporate and Regulatory Affairs at BAT Sub-Saharan Africa, in the company’s statement.
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“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.” Independent data broadly support the company’s assessment of the scale of the problem. The Transnational Alliance to Combat Illicit Trade (Tracit) reported in its2025 reviewthat the government lost an estimated R18-billion in revenue in 2022 alone due to illicit trade in tobacco. Over the two decades from 2002 to 2022, cumulative excise and VAT losses were calculated at R119-billion.
Batsa said that it was not exiting South Africa, but would continue supplying adult consumers through imported products. It would reconsider local manufacturing if there were a “substantial and sustained” improvement in efforts to curb illicit trade. While illicit trade in cigarettes predates Covid-19, Batsa has pointed to the 2020 tobacco sales ban as a turning point.
The ban, later declared unconstitutional, coincided with a rapid expansion of illegal supply networks from which the legal market never recovered. Since 2020, Batsa said it had retrenched more than 30% of its workforce, according toReuters. In 2023, the company announced a restructuring process that placed a further 200 jobs at risk, noting that its permanent workforce had already fallen from about 1,800 employees in 2019.
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