International company closing South African factory because of crime

British American Tobacco (BAT) will shut down its only cigarette factory in South Africa by the end of the year, blaming the rapid growth of illicit trade that has made local production unsustainable.

The Gauteng-based plant, which has operated since 1975 and employs about 230 people, will be closed as BAT shifts to importing cigarettes. The company says illegal cigarettes now make up an estimated 75% of the local market, forcing the factory to operate at just 35% capacity.

BAT has warned that illicit trade has severely eroded legal sales and profits, especially as cigarettes still account for the bulk of its global revenue. The company has long argued that South Africa’s 2020 tobacco sales ban during Covid-19 worsened the illegal market.

BAT has a history in South Africa stretching back over a century, including a long-standing partnership with the Rupert family, which officially ended its shareholding in the company last year.