British American Tobacco (BAT) has revealed plans to shutter its cigarette manufacturing operations in South Africa by the end of 2026, attributing the decision to the overwhelming dominance of illicit trade in the local market. The multinational tobacco giant claims that illegal cigarettes now constitute up to 75% of sales in the country, making legitimate production unsustainable.
BAT’s South African subsidiary, BATSA, confirmed the closure of its Heidelberg facility in Gauteng on January 15, marking a significant shift to an import-only model. The plant, currently operating at just 35% capacity, will cease production entirely, with BAT emphasizing that operations could restart if authorities successfully clamp down on smuggling and counterfeit activities.
The move is expected to result in the direct loss of approximately 230 jobs at the factory, with potential ripple effects endangering up to 35,000 positions across the tobacco supply chain, including farmers, distributors, and retailers. Critics, such as Business Leadership South Africa CEO Busisiwe Mavuso, have labeled the closure a stark indicator of governmental shortcomings in policy enforcement. Illicit trade has surged from around 33% before the COVID-19 pandemic to current levels, depriving the South African government of an estimated R27-28 billion in annual tax revenues.
However, not all industry voices align with BAT’s narrative. Sinenhlanhla Mnguni, chairperson of the Fair-Trade Independent Tobacco Association (FITA), which advocates for smaller manufacturers, has dismissed the 75% illicit market share figure as exaggerated “storytelling.” He pointed out that the statistic stems from a study commissioned by BAT itself, potentially biasing the results. Mnguni argued that illegal cigarettes flow from various sources, including local producers, Zimbabwean smugglers, and Asian syndicates, and suggested BAT’s exit is more about slashing operational costs than combating crime.
“BAT is cutting employees while still importing cigarettes and maintaining profits. This is less about curbing illicit trade and more about overhead reduction,” Mnguni stated, adding that at least 15 other cigarette producers in South Africa could readily absorb the displaced workforce and prevent any market void.
Public discourse on platforms like X (formerly Twitter) reflects these polarised views. Users have highlighted the scale of smuggling, often linking it to porous borders with Zimbabwe and lambasting government inaction in what some describe as a “mafia state.” Anti-illicit trade campaigner Yusuf Abramjee has spotlighted recent seizures of millions in contraband, including brands like Remington Gold, underscoring ongoing enforcement challenges.
BAT’s withdrawal highlights deeper issues in South Africa’s economy, where illicit activities thrive amid enforcement gaps and border vulnerabilities. While the legal tobacco sector may see consolidation among remaining players, experts warn that unchecked illegal trade could further discourage foreign investment in the region. As the market adapts, stakeholders are calling for urgent reforms to restore viability for compliant manufacturers.