British American Tobacco (BAT) plans to stop making factory-manufactured cigarettes in South Africa and close its Heidelberg plant in Gauteng by the end of 2026. The company says the move follows years of pressure from the illicit cigarette trade, with the factory now running at about 35% of capacity.

The Heidelberg site has operated since 1975 and is described as one of the group’s biggest facilities globally. BAT sells brands including Dunhill, Pall Mall and Peter Stuyvesant in South Africa and says it will keep serving smokers, just via a different supply model.

Closure Plan and Timeline

BAT says it has started a formal consultation process with affected employees and unions in terms of section 189A of the Labour Relations Act. The process is expected to run until the end of March 2026, ahead of the planned shutdown at year-end 2026.

Why BAT Says Local Production is No Longer Viable

The company estimates illicit products make up roughly 75% of the local cigarette market, which it says has shrunk legitimate volumes and made the Heidelberg operation unsustainable. It links the surge in illegal trade to the Covid-19 era, when sales bans and disrupted enforcement created space for illicit suppliers to expand.

BAT also points to the fiscal hit. SARS data cited in reports suggests tobacco tax collection has stalled even as consumption rose, creating a sizeable post-Covid revenue gap that the illicit market may be absorbing.

Jobs, Community Impact and What Happens Next

Around 230 staff at the plant could be affected, with consultations set to determine the outcome for workers. BAT says it will not exit South Africa and intends to keep supplying the market by importing cigarettes while retaining its local share listing.

Could the Factory Reopen

BAT has signalled it could return to local production if authorities make a meaningful dent in illicit trading. It has indicated it would consider restarting manufacturing if the black market share drops below 25%.