British American Tobacco South Africa (BAT) has begun talks with staff around the restructuring of the business that will affect some 200 jobs.
The company said yesterday that the restructuring had become necessary due to further losses in cigarette volumes in South Africa.
“BAT South Africa’s cigarette volume loss is almost entirely as a result of the continued impact of the growth in illicit cigarette trade in South Africa, and the unconstitutional ban on cigarette sales implemented during the national Covid-19 lockdown in 2020, a company spokesperson said in a statement..
In 2020, during the Covid-19 pandemic, a tobacco sales ban in South Africa resulted in an explosion of growth of the illicit market that has continued even after the ban was lifted.
“In 2019, BAT South Africa permanently employed around 1 800 highly qualified staff across its South African operations. Since 2020, we have been forced to retrench more than 30% of our workforce,” the spokesperson said.
The company said it had lost around 40% of its cigarette sales over the period as the illicit market accelerated.
BAT estimated that, based on independent studies, the illicit cigarette trade accounts for up to 70% of South Africa’s total cigarette market.
“This illegal trade has severely impacted the sustainability of the legal tobacco industry and is a source of funds for criminal organisations in South Africa,” BAT South Africa said.
BAT South Africa’s share price gained 1.2% to R652.75 yesterday morning on the JSE, a price almost midway between a 12-month high and a 12-month low, and much in line with the price a year previously on the same date.
BUSINESS REPORT