Johannesburg - British American Tobacco said it may close
South Africa’s only cigarette plant if plans to ban branded tobacco packaging
are implemented.
BAT operates its eighth-largest factory globally in Heidelberg, south of
Johannesburg. The proposed new rules would threaten the financial viability of
the operation, Joe Heshu, BAT’s head of external affairs in Southern
Africa, said in an e-mailed response to questions.
Plain packaging threatens the closure of the factory and “poses a threat to the
viability of the legal tobacco industry in South Africa,” Heshu said. The move
will make it harder to distinguish the cigarettes from black-market cigarettes
and “the illegal market will benefit from having a cheaper product,” he said.
South Africa is cracking down on industries and products viewed as harmful to
consumers, including through a planned tax on sugar-sweetened beverages, which
Finance Minister Pravin Gordhan said last month will be implemented later this
year. In his budget speech, Gordhan also announced higher taxes on tobacco and
alcohol products.
South Africa has drafted a bill mandating plain cigarette packaging, which
is expected to be made available for public comment soon, Elize Joubert, the CEO
of the Cancer Association of South Africa, a lobby group, said by phone.
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“You don’t want to build jobs based on people who are sick,”
said Joe Maila, a spokesman for the Ministry of Health, who declined to provide
a time frame for the new rules. “The process is in place and we are not
apologetic about it.”
Plain packaging of tobacco products, which has been championed globally by the
World Health Organisation, requires standardised designs on cigarette packs.
Australia was the first to introduce legislation in 2012 and other countries
including France and the UK have followed. More than 44 000 South Africans a
year die from tobacco-related diseases, according to the Cancer Association.
BAT has cut 750 jobs in South Africa in two years as it grapples with an
increase in illegal cigarettes, it said. The Heidelberg plant employs 1 100
people and produces more than 27 billion cigarettes a year for sale locally and
for export, according to the company.
According to the Tobacco Institute of Southern Africa, the supply, distribution
and sale of smuggled or counterfeit tobacco products has cost the government
more than R21 billion since 2010 in lost tax revenue. South Africa ranks among
the top five countries globally with the highest incidence of cigarette
smuggling, according to the institute.