British American Tobacco South Africa, commonly known simply as BAT, announced on January 15 that it will cease local cigarette manufacturing and close its historic Heidelberg facility in Gauteng by the end of the year.

BAT’s manufacturing swan song, as it were. This metaphorical phrase originates in an ancient Greek myth in which swans sing a beautiful song just before they die, even though they are mostly silent otherwise. If you are not a smoker, will you even bat an eye?

You might not, but I ask for your indulgence: the article is not only about cigarettes; it is about more than meets the eye. If it were a literary genre, it would be an economic thriller, full of unexpected twists.

A spoiler alert: it is in part about customs and excises, which raises the question: What do you know about it, beyond the annual National Budget announcement from the fiscus? As you contemplate this, let us explore the first 69 words of BAT’s press release, headlined ‘BAT South Africa to close manufacturing facility, end local production in SA by year-end’.

Following this headline are three bullets: ‘BATSA to close its manufacturing facility in Heidelberg, Gauteng, after illicit trade wipes out ~75% of legal cigarette market’; and ‘Company remains committed to and active in South Africa, shifting to an import model’; ‘Closure threatens approximately 230 jobs in Lesedi municipality as BATSA warns policy failures and weak enforcement put all legitimate manufacturers at risk’.

The announcement of the manufacturing closure marked the second end of an era, not only for the business but also for South Africa, in as many days. As for the other, on January 14, BusinessTech reported under the headline ‘End of an era for South African billionaire Johann Rupert’ that “South Africa’s richest man, billionaire Johann Rupert, has decided to fully divest from BAT, ending the family’s generational ties to the tobacco industry. One of Rupert’s investment groups, Reinet Investments, announced that it has agreed to sell over 43.3-million ordinary shares in BAT at a price of £28.20 per share to institutional investors. This will raise gross proceeds of some £1.2-billion (~R28.3-billion).”

Returning to customs and excises, it becomes a bit technical – you could read ‘messy’. Cigarettes imported into South Africa are liable for ordinary customs duty and specific customs duty (‘sin taxes’), while locally manufactured cigarettes are only liable for specific excise duty. Thus, there is a duty benefit for domestic manufacture. So, why would “shifting to an import model” be an economic consideration when illicit trade is seemingly rife? What would make imports immune to this scourge? Could imports still be profitable as a result of “significantly higher profit margins in the tobacco industry than in other sectors”, as stated by the Smoke Free Partnership?

Is illicit trade the sole factor “directly attributable to the exponential growth of the illicit tobacco trade in South Africa”, or is there another – the cost of doing business?

Although the World Bank no longer publishes a single Cost of Doing Business Index, its 2025 reports for South Africa emphasise high costs from poor infrastructure (electricity and logistics) and regulatory hurdles as key challenges. The reports highlight policy reforms in these areas and skills development as critical for reducing these costs.

At the time of writing, January 18, the South African Revenue Service had not commented on the assertion by BAT – which, surely, is one of its single biggest corporate taxpayers – regarding the impact of illicit trade, and that it is “becoming a significant issue in multiple industries”. According to an African Farming article published on January 17, BAT “annually contributes between R11-billion and R13-billion in taxes and excise duties to the national fiscus”.

Surely comment is warranted, more so considering that BAT states that “should there be a substantial and sustained trend change in the local illicit trade environment, BAT will reinvest in local production in South Africa”.

As a parting thought from the announcement, there is a wider economic impact: “The closure will affect more than just factory employees. The broader Lesedi community, including suppliers, logistics providers, and contractors, all depend on the facility.”