BAT to halt cigarette production in South Africa

Rampant smuggling of illicit tobacco, much of it originating from Zimbabwe and other countries, has forced British American Tobacco (BAT) to stop producing cigarettes in South Africa by the end of 2026, the company has announced.

BAT South Africa said it will cease all local cigarette manufacturing and close its Heidelberg plant in Gauteng, about 50 kilometres south-east of Johannesburg, citing the rapid growth of illegal trade, which it claims now accounts for about 75 percent of cigarette sales in the country.

The Heidelberg facility, which has been in operation since 1975, is currently running at just 35 percent of its production capacity due to what the company described as "extreme volume losses" caused by the illicit cigarette market.

"Smuggling from different countries, including Zimbabwe, is destroying the cigarette industry," BAT said, adding that the scale of illegal trade has made local manufacturing unsustainable.

Illicit cigarette smuggling from Zimbabwe into South Africa has become a major problem, involving both sophisticated criminal syndicates and low-level cross-border carriers. The trade includes cigarettes manufactured in Zimbabwe as well as products from other countries smuggled through the porous Zimbabwe–South Africa border. Authorities estimate that the trade results in billions of rand in lost tax revenue annually and poses serious challenges to law enforcement and the rule of law.

Despite the closure of its manufacturing plant, BAT said it is not exiting the South African market entirely. Instead, the company will transition to an import-only model, continuing to sell major brands such as Dunhill, Peter Stuyvesant and Pall Mall.

The shutdown places about 230 direct jobs at the Heidelberg factory at risk, while industry estimates suggest that as many as 35 000 jobs across the broader value chain — including tobacco farmers, transporters and distributors — could be affected.

The announcement follows a significant shift in BAT's ownership landscape. Earlier this year, South African billionaire Johann Rupert's investment firm, Reinet, fully divested its R28 billion stake in BAT, ending the Rupert family's more than 80-year association with the tobacco industry.

The South African closure also comes after BAT shut down its operations in Mozambique late last year, signalling a broader regional retreat from manufacturing in markets heavily affected by illicit tobacco trade.

Industry analysts warn that unless governments in the region strengthen border controls, enforcement and tax administration, illicit trade will continue to undermine legitimate businesses, cost jobs and erode public revenues.