Fake cigarette trade have taken 75 percent of the market forcing British American Tobacco South Africa (BATSA) to shut down its sole factory in South Africa.
The cigarette manufacturing company said it would close its factory in Heidelberg at the end of the year.
“With approximately 75 percent of the South African cigarette market now estimated to be illicit, continued local manufacturing has become unviable,” said Johnny Moloto, Head of Corporate and Regulatory Affairs at BAT Sub-Saharan Africa.
“This is an incredibly difficult day for BATSA and for the approximately 230 employees and families who may be affected. These are skilled, dedicated people who have given years of service, who unfortunately are affected by an illicit market that operates outside of the regulatory net.”
The company points to several policy decisions that have worsened the situation– the 2020 tobacco sales ban, from which the legitimate market has never recovered, and above-inflation
excise increases that have widened the price gap between legal and illegal products.
Adding to this is proposed new tobacco legislation currently before Parliament, which, if passed, will exacerbate South Africa’s illicit trade issues, the company said.
“BATSA has raised these concerns for years, providing data and proposing solutions. While some in government have genuinely tried to help, the overall response has not been enough to protect legitimate businesses and the jobs they create. With the illicit industry’s current size and scale, only a coordinated, whole government response can make a real impact,” said Moloto.
“We have tried everything to ensure we do not have to close this facility, which has been a part of the Heidelberg community since 1975, including implementing various efficiency initiatives over the years.
“But when three-quarters of your market is illicit, there’s a limit to what any company can do. We have reached that limit.”
About The Author
