BAT shuts South Africa plant after years of illegal tobacco warnings

Key topics:BAT to close South Africa plant due to rising illegal cigarette trade.Illicit market now makes up ~75% of SA’s cigarette sales.Govt vows crackdown on counterfeit goods, supporting affected industries..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Jennifer Creery and Janice Kew.British American Tobacco Plc warned South Africa’s government for years that it would be forced to end production there if illegal cigarette sales weren’t stamped out, according to the chief executive officer. Last month, the maker of Dunhill and Pall Mall cigarettes followed through on its threat and announced plans to shut its sole factory in South Africa by the year-end. Instead, BAT will rely on imports for South Africa, where the tobacco-maker can trace its roots back more than a century. “They cannot say they didn’t know,” said CEO Tadeu Marroco in a phone call with Bloomberg News Thursday. “Every time we did a downsize, we went back to the government and said, ‘look we are doing all we can’,” he said, adding that the problem was never effectively addressed. The facility, located in the province of Gauteng, has been operating since 1975 and is BAT’s eighth-largest worldwide. It employs about 230 staff, whose future will be determined through a consultation process..Read more:.Spirits cut: SA’s liquor law change sparks fears of economic fallout and illicit trade surge.Illicit cigarette trade in South Africa has been on the rise for more than a decade. During the so-called state capture era under the nine-year presidency of Jacob Zuma that ended in 2018, South Africa’s enforcement institutions were systematically weakened. The revenue service and prosecutorial bodies lost leadership, skills and independence, eroding oversight in high-tax sectors such as tobacco. As enforcement capacity fell, illicit manufacturers expanded, under-declaring production and avoiding excise duties, accelerating the growth of a parallel cigarette market.The destabilization of the South African Revenue Service was pivotal too. Once a strong tax authority, it lost specialist units and experienced investigators, creating space for organized networks to scale. Untaxed cigarettes rapidly gained share, undercutting compliant producers such as BAT and costing the state billions in foregone revenue.Covid made the situation worse. Marroco said the company had alerted President Cyril Ramaphosa’s government that a decision to ban the sale of alcohol, tobacco and vaping products for several months in 2020 would boost the country’s already substantial illegal cigarette market. At the time, BAT South Africa tried to overturn the ban, which was aimed at containing the pandemic. Today illicit trade still makes up about 75% of South Africa’s traditional cigarette market and the government has not been able to bring the figure down to “meaningful levels” since Covid, Marroco said.The government will tackle illegal tobacco trade as part of a broader crackdown on the illicit economy, Ramaphosa said in his state-of-the-nation speech in Cape Town on Thursday evening. Counterfeit goods are a growing threat that undermines South African jobs and industries, he said, pledging extra support through a new national program specifically designed to disrupt these dealings. .© 2026 Bloomberg L.P.

BAT shuts South Africa plant after years of illegal tobacco warnings

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