British American Tobacco SA proposes restructuring, 200 jobs at risk

The South African arm of British American Tobacco (BAT) is looking to restructure the business, a process that may affect about 200 jobs, after a further decline in its cigarette sales in the country, it said on Monday.

The Dunhill and Peter Stuyvesant cigarette maker said the drop in sales in South Africa was almost entirely due to the growth in the illicit cigarette trade.

The “unconstitutional ban” on cigarette sales implemented during the Covid-19 lockdown in 2020 also contributed, a company spokesperson said.

“The 2020 tobacco sales ban resulted in an explosion of growth for the illicit market. This has continued after the ban on tobacco sales was lifted,” the company said.

During the lockdown, retailers were not allowed to sell alcohol or cigarettes.

BAT did not give details of how it would restructure its business or which jobs might be cut.

In 2019, BAT SA permanently employed about 1,800 staff across its local operations. Since 2020, it has been forced to retrench more than 30% of its workforce, the company said.

Over the same period, the company’s cigarette sales dropped by about 40% as the illicit market accelerated, it said.

Based on independent studies, BAT SA estimates the illicit cigarette trade accounts for up to 70% of the country’s total cigarette market.

As a result, the company has begun a consultation process with staff around restructuring the business and “it is expected around 200 company jobs may be affected by the proposed restructure”.

Reuters