British American Tobacco South Africa (BAT SA) has announced it will close its Heidelberg manufacturing facility by the end of 2026, bringing an end to local cigarette production after more than five decades of operation in the country.
The company, which has operated the Gauteng-based plant since 1975, said the decision was driven by the devastating growth of the illicit cigarette trade, which it estimates now accounts for about 75% of South Africa’s total cigarette market.
BAT SA said continued local manufacturing had become economically unviable under these conditions. This forces the company to abandon domestic production. It will now transition to an import-based supply model to continue serving adult consumers in South Africa.
Local manufacturing now unviable
“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 and regulatory affairs at BAT Sub-Saharan Africa.
The Heidelberg facility, located in the Lesedi Municipality, is currently operating at just 35% of its installed capacity. This is due to severe volume losses, which the company attributes directly to the rapid expansion of the illicit tobacco trade.
“This is an incredibly difficult day for BAT SA and for the approximately 230 employees and families who may be affected,” Moloto said.
“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.”
The closure threatens around 230 direct jobs. And it is expected to have a broader economic impact across the local value chain. This includes suppliers, logistics providers and contractors who depend on the factory’s operations.
BAT SA said it has engaged government and law enforcement authorities for more than a decade. It has repeatedly warned about the growth of illicit trade and called for stronger enforcement.
Many other factors forced shut down
The company pointed to several policy decisions it believes worsened the situation. These include the 2020 tobacco sales ban and above-inflation excise increases that widened the price gap between legal and illegal cigarettes.
It also raised concerns about proposed new tobacco legislation before Parliament. And it noted that the South African Revenue Service previously warned that the legislation could further fuel illicit trade.
“We have tried everything to ensure we don’t have to close this facility. It has been a part of the Heidelberg community since 1975,” Moloto said. “But when three-quarters of your market is illicit, there’s a limit to what any company can do. We’ve reached that limit.”
Affected employees consulted
Despite the closure, BAT SA stressed that it remains committed to South Africa. It will continue operating in the country through an import-based supply chain. Moloto said the company would reconsider local manufacturing should there be a “substantial and sustained” improvement in the illicit trade environment.
BAT SA has formally commenced consultations with affected employees and unions. This is in line with Section 189A of the Labour Relations Act. The consultation process is expected to conclude by the end of March 2026. With the full closure of the Heidelberg facility planned for the end of 2026.
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