British American Tobacco (BAT) has announced its intention to end domestic production operations in South Africa by 2026, citing the rising prevalence of illegal cigarette sales in the country. According to a company statement, the decision is a direct result of the challenging market conditions, with illicit trade accounting for approximately 75% of the market.
The Heidelberg manufacturing plant, operational since 1975, has seen decreased activity, operating at only 35% capacity. The plant’s production has been severely impacted by the growth of the parallel market, which has undercut compliant producers.
“The growth of the illicit trade has made it impossible for us to continue production in South Africa,” said a BAT spokesperson. The company has been vocal about the need for stronger enforcement and tax oversight to combat the illicit trade.
The decision is expected to have significant implications for the South African economy, with thousands of jobs at risk. The government has been criticized for its handling of the situation, with many arguing that more could be done to tackle the illicit trade.
The BAT decision highlights the challenges faced by legitimate businesses in South Africa, where the illicit trade has become a major concern. The company is exploring options for the future of its operations in the country.
The move is part of a broader trend of companies struggling to operate in environments with high levels of illicit trade.
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Author: Korkor Anumu
