British American Tobacco South Africa (BATSA) announced it will cease local production of factory-manufactured cigarettes and close its only South African manufacturing facility in Heidelberg by the end of 2026.

The company attributed the decision to the rapid growth of the illicit cigarette trade in the country, which it says has made local manufacturing unfavourable. BATSA will transition from a local manufacturing model to an import-based supply chain to meet the needs of adult consumers in the country.

According to the Head of Corporate and Regulatory Affairs at BATSA Sub-Saharan Africa, Johnny Moloto, an estimated 75% of the South African cigarette market is now illicit.

Moloto reiterates that local manufacturing is no longer sustainable under these conditions.
He explained that the Heidelberg facility is currently operating at only 35% of its total capacity due to severe losses directly linked to the illicit tobacco trade.

“This is an incredibly difficult day for BATSA and for the approximately 230 employees and their families who may be affected. These are skilled, dedicated people who have given years of service and are now impacted by an illicit market that operates outside the regulatory net.”

BATSA said it has engaged government and law enforcement authorities for more than a decade, consistently raising concerns about the growth of illicit trade and calling for stronger enforcement.

The company cited several policy decisions that it believes have worsened the situation, including the 2020 tobacco sales ban, above-inflation excise tax increases that widened the price gap between legal and illegal cigarettes, and proposed new tobacco legislation currently before Parliament.

“If passed, the legislation will further exacerbate South Africa’s illicit trade problem,” the company said.

“While some in government have genuinely tried to help, the overall response has not been sufficient to protect legitimate businesses and the jobs they create. Only a co-ordinated government response can make a real impact.”

Moloto said the company had explored all possible options to keep the plant operational.

“When three-quarters of your market is illicit, there’s a limit to what any company can do. We’ve reached that limit,” he said.

The closure is expected to have a ripple effect beyond factory workers. The wider Lesedi community, including suppliers, logistics companies, and contractors, also relies on the facility.