BAT to shut SA factory due to surge in illicit cigarette trade
Zuko Komisa
- British American Tobacco South Africa (BATSA) will close its Heidelberg factory by the end of 2026, ending over 70 years of local production.
- The company cited an “unviable” market where illegal cigarettes now account for an estimated 75% of total sales in South Africa.
- BATSA will pivot to an import only supply model to serve local customers, a move that places roughly 230 manufacturing jobs at risk.
British American Tobacco South Africa (BATSA) has announced it will cease all local cigarette production by the end of 2026, marking the end of more than 70 years of manufacturing in the country.
The tobacco giant confirmed on Thursday that its sole facility in Heidelberg, Gauteng, will close due to the “devastating impact” of the illegal cigarette trade.
The factory is currently operating at only 35% capacity, with BATSA estimating that 75% of the South African market is now illicit.
The company cited several factors that rendered local manufacturing unviable, including the permanent market shift following the 2020 tobacco sales ban and above-inflation excise increases.
These “sin taxes,” coupled with a VAT increase to 16% scheduled for April 2026, have widened the price gap between legal products and unregulated alternatives.
The closure puts approximately 230 jobs at risk and will affect the broader Lesedi community, including local suppliers and contractors. To continue serving the domestic market, BATSA, the maker of Dunhill and Pall Mall will transition to an import-based supply chain.
Johnny Moloto, Head of Corporate & Regulatory Affairs, stated that while the company remains committed to South African consumers, it has reached its limit. However, he noted that BATSA would consider reinvesting in local production should there be a “substantial and sustained” reduction in illegal trade.
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