Dark clouds gather over an important 51-year-old factory which used to employ over 1,000 people

British American Tobacco (BAT) is set to shut down its 51-year-old factory in Heidelberg by the end of 2026, marking the end of an era for the company and the town. 

The Heidelberg factory is the eighth largest in BAT’s global network and accounts for a significant share of the total production of cigarettes in South Africa and the wider region. 

Founded in 1948 by Anton Rupert as part of his Rembrandt Tobacco Corporation, the facility has a storied history, with it being the most advanced plant of its kind in the world. 

The original facility was located in the Western Cape after Rupert obtained land along the Berg River to build a modern cigarette and tobacco manufacturing plant. 

It formed the basis of Rupert’s Rembrandt, which has since enabled the family to create a multi-business empire, including Remgro, Reinet, and Richemont. 

The company had immense success in manufacturing and selling tobacco products in South Africa, listing on the JSE less than a decade after its launch. 

It gradually diversified into other sectors, using the proceeds from cigarette sales to fund investments in mining, financial services, engineering projects, and food production. 

The Ruperts also picked up other tobacco interests around the world and, in the 1990s, merged their interests into Rothmans International in 1995. This was then merged with BAT. 

At this time, the cigarette manufacturing facility in South Africa was one of the most advanced in the world, with it having installed machines to make long-filter cigarettes in 1952. 

This was the first facility with such production capabilities in the world, and its cutting-edge manufacturing processes saw the factory become the hub for BAT in Southern Africa. 

However, becoming the hub for cigarette manufacturing required a significantly larger facility than the land by the Berg River could accommodate. 

Furthermore, the facility had to be closer to major demand centres in Gauteng and neighbouring African countries. It also had to be closer to suppliers in Zimbabwe, Zambia, and Malawi. 

As a result, the facility was moved to Heidelberg in Gauteng and rapidly expanded to become one of the largest plants of its kind in the world. 

At its peak, the factory employed over 1,000 people directly and sustained over 35,000 jobs in South Africa across the broader tobacco value chain. 

The 35-hectare site is BAT’s eighth-largest in the world and produced around 26 billion cigarettes a year at its peak. It also produced around 1,400 tonnes of cut-rag tobacco annually. 

Across key brands such as Dunhill, Peter Stuyvesant, Rothmans, Pall Mall, and Kent, the factory supplied the majority of legal cigarettes in Southern Africa. 

However, in announcing that the facility will be shut down by the end of the year, BAT revealed that it has been operating at 35% of its capacity and with only 230 staff members due to the sharp rise in illicit cigarettes in South Africa. 

End of an era

The BAT plant in Heidelberg is set to be mothballed due to the surge in illicit tobacco trade in South Africa, with illegal cigarette sales now making up 75% of the market. 

BAT has explained that the facility will not be sold or broken down, and that it will reopen the factory should the market share of illicit cigarettes in South Africa shrink significantly. 

The plant’s closure is despite repeated calls from industry and business leaders about the disastrous impact of illicit trade in South Africa. 

BAT’s calls for action from the government, among others, appear to have fallen on deaf ears, as little has been done to meaningfully address the rise of the illicit industry in South Africa. 

The company said that while the legal market in South Africa and the excise tax revenue it generates for the state have collapsed, total annual cigarette consumption has increased due to illicit trade. 

In 2014, local manufacturers declared about 22 billion cigarettes to SARS and generated R12.6 billion in excise tax revenue. 

A decade later, this had fallen to just 8.3 billion cigarettes, and excise tax collected by SARS declined to R8.3 billion despite the rate levied on tobacco products rising. 

BAT said the rise in illicit trade is the reason it is closing its Heidelberg plant, noting that the industry has never recovered from the ban placed on legal cigarette sales in 2020. 

While this ban was eventually declared unconstitutional, it did major damage to the legitimate industry and undermined SARS’ efforts to clamp down on illegal trade. 

BAT laid much of the blame squarely on the government for its disastrous policies and for its inability to police the sector through law enforcement agencies. 

Apart from the tobacco sales ban in 2020, the company also pointed to the sharp rise in excise tax levied on cigarettes in South Africa. 

These increases make legitimate products increasingly expensive, pushing customers towards illicit alternatives that are significantly cheaper as they do not levy the required taxes. 

Another factor in BAT’s closure of the Heidelberg plant was the government’s willingness to double down on policies that are damaging to legitimate businesses. 

BAT said the new tobacco legislation before Parliament risks exaggerating the impact of the growth in illicit trade, making it more difficult for legal businesses to survive. 

In 2025, SARS stated that it believed the legislation would worsen the illicit tobacco trade through the use of plain packaging. 

“BAT South Africa has raised these concerns for years, providing data and proposing solutions. While some in government have genuinely tried to help, the overall response hasn’t been enough to protect legitimate businesses and the jobs they create,” the company said.