BAT South Africa To Close Heidelberg Factory, End Local Cigarette Production By End Of 2026

JOHANNESBURG – British American Tobacco South Africa (BATSA) has announced it will shut down its only cigarette manufacturing facility in the country by the end of 2026, bringing an end to more than five decades of local production and putting around 230 jobs at risk in Gauteng’s Lesedi Municipality.

The company said the decision was driven by the rapid expansion of the illicit cigarette trade, which it estimates now accounts for about 75 per cent of South Africa’s total cigarette market, making local manufacturing financially unsustainable.

The Heidelberg plant, which has been operating since 1975, is currently running at just 35 per cent of its installed capacity as legal sales volumes have collapsed. BATSA said it would transition to an import-based supply model to continue supplying the South African market, stressing that it is not exiting the country.

“This is an incredibly difficult day for BATSA and for the employees and families who may be affected,” said Johnny Moloto, Head of Corporate and Regulatory Affairs at BAT Sub-Saharan Africa. “These are skilled, dedicated people who have given years of service, and they are paying the price for an illicit market that operates outside the regulatory net.”

The company has begun a formal consultation process with affected workers and unions in line with Section 189A of the Labour Relations Act. BATSA expects this process to conclude by the end of March 2026, with the full closure of the manufacturing facility planned for the end of the year. While the decision to close the factory has been taken, the final impact on individual jobs will be determined through this consultation process.

Beyond the direct job losses, BATSA warned of wider economic consequences for the Heidelberg and Lesedi communities, where suppliers, logistics providers and contractors depend on the factory’s operations.

IV ZEAL VITAMIN

BATSA has long blamed policy and enforcement failures for the growth of illicit tobacco in South Africa. The company pointed to the 2020 tobacco sales ban during the COVID-19 lockdown, which it described as unconstitutional and from which the legal market never recovered. It also cited repeated above-inflation excise increases that have widened the price gap between legal and illegal cigarettes.

In addition, the company raised concerns about the proposed new tobacco legislation currently before Parliament, arguing that it could further strengthen illicit trade. It noted that the South African Revenue Service has previously warned lawmakers that aspects of the proposed legislation may worsen the problem.

“BATSA has spent the past decade engaging with government, sharing data and proposing solutions,” Moloto said. “While there have been genuine efforts from some quarters, the overall response has not been enough to protect legitimate manufacturers and the jobs they create. At the current scale of illicit trade, only a coordinated, whole-of-government response will make a real difference.”

The company said it would consider reinvesting in local manufacturing in South Africa if there were a substantial and sustained improvement in the illicit trade environment.

BATSA also framed the closure as a warning to other sectors of the economy, saying illicit trade is increasingly affecting industries beyond tobacco, including alcohol, pharmaceuticals, food, clothing and consumer goods.

“If a facility that has operated for 50 years can be forced to close, it can happen to anyone,” Moloto said. “This is about more than tax collection. It is about protecting legitimate businesses, jobs and communities.”