It Was Bound to Happen: BAT Pulls Cigarette Production Out of South Africa

It hardly comes as a surprise to learn that British American Tobacco (BAT) – which controls roughly two thirds of South Africa’s legal cigarette market – has decided to close its sole manufacturing plant in the country, as it struggles to operate in a market consumed by illicit trade.

‘With approximately 75% of the South African cigarette market now estimated to be illicit, continued local manufacturing has become unviable,’ said Johnny Moloto, Head of Corporate & Regulatory Affairs at BAT Sub-Saharan Africa.

The plant currently operates at just 35% of total capacity, reflecting severe volume losses that BAT attributes directly to the exponential growth of illegal cigarettes. While BAT will no longer manufacture cigarettes locally, it says it remains committed to the South African market and will shift from domestic production to an import-based supply chain to continue serving consumers.

The illicit cigarette market started to entrench itself across South Africa following a blanket ban on all smoking during the COVID-19 lockdowns. Since then, this illegal market has not only persisted, but expanded, with South African Revenue Service (SARS) warning that international criminal syndicates are now partnering with local networks to penetrate the market.