British American Tobacco is shutting down its Heidelberg manufacturing plant in South Africa, leading to 230 job losses, as it shifts to importing cigarettes amid a booming illicit trade. At the same time, the company is continuing an aggressive share buyback program in London to reward shareholders. Workers and experts point to government inaction on illegal cigarettes as a key factor in the decline.
British American Tobacco (BAT) announced the closure of its historic Heidelberg manufacturing plant later this year, resulting in the retrenchment of 230 workers. This move signals a shift from local production to importing, following cuts to sales positions at the end of 2025. The company attributes the decision primarily to the illicit cigarette trade, which it estimates controls 75% of the South African market.
Finance Minister Enoch Godongwana highlighted the crisis in his November 2025 budget statement, noting that the state has lost R40-billion in excise revenue since 2020 due to the black market. A former BAT employee, who spoke anonymously after being retrenched last year, expressed frustration not with the company but with government failure to curb illicit trade. "The real culprit, honestly, in this whole thing is the government," the employee said. "They’ve done nothing to help fight illicit trade."
Meanwhile, on January 19, 2026, BAT revealed it bought back 138,086 of its shares on January 16 at prices up to £43.86 (about R965). This financial strategy aims to boost earnings per share and support the stock price, which closed at R926.50 after a 10.28% gain over three months and 43.04% over a year. Johnny Moloto, BAT's area head of corporate and regulatory affairs for Sub-Saharan Africa, emphasized fair severance packages during ongoing consultations and no plans for price increases due to the import shift.
The tobacco sector faces further challenges from the Tobacco Products and Electronic Delivery Systems Control Bill, currently before Parliament, which proposes plain packaging, graphic warnings, and bans on displays and vending machines. The industry argues these could exacerbate illicit trade by making legal products harder to distinguish. BAT maintains it could restart production if market conditions improve, but the transition represents a loss of industrial capacity for South Africa.