{"id":880039,"date":"2026-10-15T17:04:26","date_gmt":"2026-10-15T15:04:26","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=880039"},"modified":"2026-10-15T17:04:26","modified_gmt":"2026-10-15T15:04:26","slug":"r2-trillion-international-company-that-shut-down-its-business-in-south-africa-because-of-crime","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/880039\/r2-trillion-international-company-that-shut-down-its-business-in-south-africa-because-of-crime\/","title":{"rendered":"R2 trillion international company that shut down its business in South Africa because of crime"},"content":{"rendered":"\n

British American Tobacco (BAT) is months away from wrapping up its only South African manufacturing plant after illicit cigarettes made local production unviable.<\/p>\n\n\n\n

The global tobacco giant, which produces brands including Peter Stuyvesant, Pall Mall and Dunhill, is valued at more than R2 trillion on the Johannesburg Stock Exchange (JSE).<\/p>\n\n\n\n

BAT said criminal syndicates continue to operate with impunity despite government efforts to tackle the illicit economy.<\/p>\n\n\n\n

It added that this has undermined legitimate businesses, destroyed jobs and deprived the state of tax revenue.<\/p>\n\n\n\n

New research by Ipsos, commissioned by BAT South Africa, suggested that the government’s latest crackdown has done little to curb the illegal cigarette trade.<\/p>\n\n\n\n

The study, released on 13 October 2026, found that cigarettes priced below the minimum collectable tax (MCT) of R27.12 per pack remained freely available in approximately 75% of stores surveyed. <\/p>\n\n\n\n

Packs selling for less than R20 were available in almost two-thirds of stores.<\/p>\n\n\n\n

The findings come months after President Cyril Ramaphosa announced the National Illicit Economy Disruption Programme.<\/p>\n\n\n\n

This is also known as Operation Ukubusa, and is part of a broader strategy to combat organised crime, illicit trade, and economic offences.<\/p>\n\n\n\n

Johnny Moloto, head of corporate and regulatory affairs for BAT Sub-Saharan Africa, said the research showed that illegal manufacturers continued to sell cigarettes for less than the taxes payable on each pack.<\/p>\n\n\n\n

\u201cThese results show that while the President has recognised the threat of the illicit tobacco trade and signalled the government’s intention to address it, illicit manufacturers continue to operate with impunity,\u201d Moloto said.<\/p>\n\n\n\n

He called on the South African Revenue Service (SARS) to demonstrate that there were consequences for businesses profiting from illicit trade.<\/p>\n\n\n\n

BAT estimated that the illegal cigarette market now accounts for approximately 75% of South Africa’s total cigarette sales.<\/p>\n\n\n\n

The company has warned that the industry risks becoming almost entirely illicit if enforcement does not improve.<\/p>\n\n\n\n

\u201cThe only conclusion from these results is that South Africa is losing the battle against illicit tobacco and on the current trajectory will end up with an entirely illicit tobacco market, with no legal industry left,\u201d Moloto said.<\/p>\n\n\n\n

The government has the means to turn this situation around<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

He estimated that the illicit cigarette trade costs the government around R30 billion annually in lost excise tax revenue, while also threatening formal employment and legitimate businesses.<\/p>\n\n\n\n

\u201cBAT\u2019s decision earlier this year to close its South Africa factory was a direct result of illicit trade taking over the market,\u201d said Moloto.<\/p>\n\n\n\n

\u201cIt is an early warning for the rest of the economy of what the future looks like unless we get serious about dealing with illicit operators.\u201d<\/p>\n\n\n\n

BAT announced its South African factory closure in January and blamed the growth of contraband cigarettes for making domestic manufacturing unsustainable.<\/p>\n\n\n\n

The Heidelberg, Gauteng, facility was once the eighth-largest plant in BAT’s global manufacturing network and also supplied export markets across Southern Africa. However, it has been operating at just 35% of capacity.<\/p>\n\n\n\n

The closure process began on 15 January, with consultations involving affected employees and unions.<\/p>\n\n\n\n

Although local manufacturing is ending, BAT has said it remains committed to the South African market through imported products.<\/p>\n\n\n\n

Moloto said the company had repeatedly called for a minimum retail price (MRP) of R38 per pack of cigarettes to help authorities identify potentially illicit products.<\/p>\n\n\n\n

He argued that the current system requires police to interpret several pieces of legislation and bring in specialists from other government departments to establish whether cigarettes are illegal.<\/p>\n\n\n\n

A minimum retail price would give law enforcement a more straightforward mechanism to identify non-compliant products. SARS has previously described such a measure as a way to \u201clevel the playing field\u201d in the tobacco market.<\/p>\n\n\n\n

BAT also wants manufacturing licences revoked for companies found to be consistently under-declaring production or evading tax.<\/p>\n\n\n\n

\u201cThe international community is watching. The government has the means to turn this situation around. The time for action is now,\u201d Moloto said.<\/p>\n","protected":false},"excerpt":{"rendered":"

One of the most valuable companies on the JSE is months away from wrapping up its only South African manufacturing plant after illicit cigarettes made local production unviable.<\/p>\n","protected":false},"author":92,"featured_media":880051,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2110748801291943976","_sma_facebook_post_id":"191437357620492_2238175147002884","_sma_instagram_post_id":"18356676061175979","_sma_x_attempts":1,"footnotes":""},"categories":[9872],"tags":[26827,19923,853],"class_list":["post-880039","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-british-american-tobacco-bat","tag-illicit-cigarette-market","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880039","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=880039"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880039\/revisions"}],"predecessor-version":[{"id":880052,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880039\/revisions\/880052"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/880051"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=880039"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=880039"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=880039"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}